Eagle’s bulker hit by ‘projectile’, crew uninjured as Red Sea situation continues to escalate

Eagle Bulk Shipping’s bulker MV Gibraltar Eagle is the latest commercial vessel to be targeted by the Houthis in the Red Sea as tensions in the region escalate following U.S. and U.K.-led airstrikes on Houthi’s positions in Yemen.

The Conneticut-based dry bulk shipping major confirmed the attack in a statement saying that on January 15, M/V Gibraltar Eagle was hit by an ‘unidentified projectile’ approximately 100 miles offshore in the Gulf of Aden. The vessel is flagged in the Marshall Islands and is a U.S.-owned and operated vessel.

“As a result of the impact, our vessel suffered limited damage to a cargo hold, but is stable and is heading out of the area.

All our seafarers onboard the vessel are confirmed to be uninjured. The vessel is carrying a cargo of steel products.

“We remain in close contact with all relevant authorities concerning this matter, ” the company said in a statement.

The U.S. Central Command also informed of the attack saying that Houthi militants fired an anti-ship ballistic missile from Houthi-controlled areas of Yemen and struck the M/V Gibraltar Eagle.

“The ship has reported no injuries or significant damage and is continuing its journey. Earlier in the day, at approximately 2 p.m. (Sanaa time), U.S. Forces detected an anti-ship ballistic missile fired toward the Southern Red Sea commercial shipping lanes. The missile failed in flight and impacted on land in Yemen. There were no injuries or damage reported,” U.S. Central Command said.

As feared by many analysts, recent air strikes by the United States and the United Kingdom in Yemen have not deterred the group, but have resulted in greater popularity of the Houthis within Yemen.

What is more, the latest rush to air strikes has further escalated tensions in an already fragile ceasefire in Yemen.

Khaled Khiari, Assistant Secretary-General of the UN for the Middle East, Asia and the Pacific in the Departments of Political and Peacebuilding Affairs and Peace Operations, called for a deescalation of violence and restraint saying that the region is on a dangerous escalatory trajectory that could potentially impact millions in Yemen, the region and globally.

“We are witnessing a cycle of violence that risks grave political, security, economic and humanitarian repercussions in Yemen and the region,” he warned.  Recent humanitarian improvements in that country are fragile and could easily be reversed. Further, progress towards reaching a political settlement to end the war in Yemen could be undermined, leaving its people to face the impact of continued conflict.

The Houthi forces ascribed their attacks on shipping in the Red Sea to pressure tactics aimed at enticing the global powers to deescalate Israel’s war on Gaza, which has claimed the lives of over 24,000 people, mostly civilians and bringing in the desperately needed humanitarian aid into the strip.

Speaking yesterday on the topic, United Nations Secretary-General António Guterres, said that Israel’s ongoing onslaught in Gaza has seen levels of civilian killings at an unprecedented rate, fiercely criticizing collective punishment of the Palestinian people. He has also called for the release of Israeli hostages held by Hamas and legal prosecution of violence committed on October 7.

The U.N. has also demanded an immediate stop to Houthi’s attacks on commercial shipping in the Red Sea and the release of the Galaxy Leader car carrier and its crew, who were captured in November by Houthi forces.

Morningstar DBRS, a global credit ratings business, said that following the airstrikes from the U.S. and UK militaries on Houthi targets in Yemen carried out on January 11, the marine insurance market is now expecting rates to go up in the following days as underwriters expect retaliatory attacks from the rebels.

“Before the outbreak of the Hamas-Israel war and the involvement of the Houthi rebels in the conflict, war insurance rates for marine hull were a nominal 0.05%, with many underwriters waiving the cost of war coverage altogether for sailing in the Red Sea. However, since the onset of the hostilities, war rates have jumped, up to 0.7% at their peak. For a vessel (excluding the value of the cargo) with a total insurable value of $120 million, this translates to more than $800,000 in additional insurance costs per trip in the area,” the rating business said.

Marine war insurance is a specialized type of insurance that covers risks associated with political violence, terrorism, and other perils in maritime transport.

The recent attacks in the Red Sea are likely to increase the demand for this type of insurance as shipping companies and cargo owners seek to protect themselves against potential losses, as explained by the rating agency. This development is also expected to have broader implications for marine insurance prices, which are likely to rise in response to increased demand. At the same time, insurers may reassess their exposure in the region and adjust pricing accordingly.

Morningstar DBRS’s said that the success of the Operation Prosperity Guardian in weakening Houthi rebels and deterring regional support is expected to stabilize war insurance prices, albeit at levels higher than before the Hamas-Israel War. Conversely, a failure in the U.S.-led coalition’s efforts could result in the unavailability of war insurance coverage, prompting a shift in maritime traffic to the longer Cape of Good Hope route.

Despite heightened tensions, war insurance coverage remains available for Red Sea voyages, with prices surging due to escalating violence.

 In the three weeks after mid-December, some 80% of the container vessels on the route have been forced to change course, a level which reached 90% in the first week of January, according to Clarksons.

As of January 7, 2024, 354 containerships have been diverted from the Suez Canal to the Cape route, constituting 80% of ships between the Atlantic/Mediterranean basins and the Indian Ocean.

As a result, container spot rates have gone up and are expected to increase even further.