Growing concerns that Trump’s Gaza plan will undermine Red Sea shipping

There was cautious optimism following the ceasefire in January between Hamas and Israel that the Red Sea shipping would resume after more than a year of attacks by the Iranian-backed Yemeni Houthi terrorist militia. However, critics worry that U.S. President Donald Trump’s plan to resettle Gaza residents in other countries could disrupt efforts to resume Red Sea shipping.

The Houthis and their Iranian paymasters oppose Trump’s Gaza plan and have vowed to “support Gaza against displacement” by resuming attacks on Israel and international vessels in the region. 

Some 12% of all global shipping passes through the strategically important Red Sea and the Egyptian Suez Canal, transporting goods from Asia to Europe and beyond.

Egypt is particularly concerned as the Houthi attacks threaten international shipping through the Suez Canal, which constitutes a significant source of their income. 

The Chairman of the Suez Canal Authority, Osama Rabie recently articulated Cairo’s concerns in the Egyptian talk show Last Words: 

“Trump’s statements and the uncertainty they caused regarding the second phase of the cease-fire agreement have affected maritime traffic in the Red Sea,” Rabie said.

The senior Egyptian official noted that the passage of six American and British vessels through the Red Sea in January constituted an encouraging sign prior to Trump’s Gaza plan announcement. 

Rabie agreed with the talk show interviewer Lamis Al-Hadidi who claimed that Trump’s recent Gaza statements undermined regional stability and could have a negative impact on the Red Sea and Suez Canal shipping. 

“That’s an accurate statement. The signs indicate ships are supposed to return to the Red Sea and the Suez Canal,” the senior Egyptian official stated. 

“Does this statement add to the concern?” Al-Hadidi asked, pointing out that there is a real risk the Gaza ceasefire will eventually collapse and reignite regional violence. 

“Of course, it increases anxiety,” Rabie assessed, adding cautious optimism that Red Sea shipping would return to normal capacity by midyear. 

However, the Houthis recently threatened to resume attacks on the Jewish state if the fragile ceasefires with Hamas in Gaza and Hezbollah in Lebanon end. 

A potential resumption of Houthi attacks on Israel and international Red Sea shipping would likely force global traders to switch once again to the longer but more stable route along the Cape of Good Hope in southern Africa. 

International pundits have also expressed their concerns about the future of Red Sea shipping due to continued regional tensions. 

“Early hopes for a return to Red Sea shipping have been dashed. A week ago, there was light at the end of the tunnel, but now the likelihood of resuming Red Sea traffic is diminishing,” assessed Lars Jensen, CEO of a business that offers professional consulting services to ship owners and international traders. 

Vincent Clerc, CEO of the shipping giant Maersk, also expressed concerns about the complex security challenges in the Red Sea region. 

“Returning to the Suez Canal is a complex process, and we need to ensure it’s not just for a few months. As long as there’s uncertainty about what the situation will look like in the coming weeks, we’ll wait,” Clerc told the Financial Times.

Maersk’s best-case prediction is that Red Sea trade will resume by mid-2025. However, it warns that growing regional tensions could result in a very limited trade until the end of 2025. 

Meanwhile, there are growing tensions between Egypt and Israel as a result of Egypt’s irregular military buildup in the Sinai Peninsula, close to the Israeli border. Israel's ambassador to the United States, Dr. Yechiel Leiter recently briefed Jewish American organizations on the Egyptian military buildup, which he argues violates the peace agreement between Egypt and Israel.