What has happened?

Since October 2023, Israeli forces have been engaged with fighters from both the Hamas and Hezbollah organisations. 

Over the same period, Houthi militants from Yemen have supported Hamas by attacking merchant and naval shipping in the Red Sea area, despite multi-national efforts to suppress them. 

In April 2024, the Iranian consulate in Syria was attacked, killing senior personnel. Iran has responded with a large-scale attack on targets in Israel.

Most incoming Iranian ordnance was shot down by Israeli forces, supported by the French, UK, US and some Arab allies.
 
These direct attacks represent an escalation of military activity since, until now, conflict between Israel and Iran has largely been conducted via proxy forces, rather than directly. 

Reactions

The UN Secretary-General has warned against further hostilities, urging both sides to show restraint. The G7 group of nations has issued a similar statement, as has the UK government.

Official spokesmen for Israel and Iran have threatened further military activity but, at the time of writing, no additional steps have been taken.

Impact on shipping 

Global shipping movements in the Middle East region have now been affected by military activity for at least the last six months. 

Shipping movements on the crucial Red Sea / Suez Canal route have been reduced, with some vessels diverting via the Cape of Good Hope, as shown on the accompanying chart.

The cost of international shipping has also risen, due to increased risk and the financial impact of taking the longer Cape route.

Transport planners will remain alert to further changes, but most commercial impact of this conflict has likely already been accounted for. 

In the long term, the major effect is likely to be persistent high global prices for energy and goods, which will damp down global economic recovery from Covid, especially in concert with the war in Ukraine. So far, the price of Brent Crude Oil has not increased. 

Note that other shipping disruptions are also taking place. In addition to short-term weather issues, shipping is also affected by problems such as water shortages in the Panama Canal and a bridge collapse at Baltimore.

IGD Viewpoint

Problems in the Middle East have not, so far, created broad price or availability issues for food and grocery businesses operating in the UK.

The UK is a major importer of food and other goods, but most imports come from or via Europe so the English Channel and Irish Sea routes are more important than the Red Sea / Suez Canal.

Specific items may, of course, be affected – rice, tuna, spices, and other items that are sourced from Asia, for example – and almost all business activities are exposed to changing energy costs. 

However, conflict in the Middle East has highlighted the potential for geopolitical issues to impact food and grocery supply chains. Any further conflict has the potential to disrupt supply chains and increase oil prices.

Business planners need to account for this in order to ensure food security for UK shoppers.  For more on this, refer to our new free article on geopolitics.