Why the Red Sea is the New Persian Gulf
Since the 1979 Iranian Revolution, the Persian Gulf has been a hotspot for practically every type of geopolitical risk imaginable. The fact that nearly 20% of the world’s oil flows through the Strait of Hormuz certainly speaks to the importance of the region.
However, it is only about to get worse. Over the past several months, the Red Sea has become increasingly militarized. Egypt, Saudi Arabia, the UAE, Turkey, and Sudan have built up their forces in the region to the point that, while all players remain Sunni (more on that in a moment), there is still plenty of tension between the Saudi Arabia/UAE/Egypt bloc and an emerging alliance between Turkey and Sudan. This is before considering an increased Chinese presence in Djibouti.
Meanwhile, in order to pay for an ambitious new public healthcare program, Egypt is expected to push for a four-fold increase in Suez Canal transits, which is itself augmented by increased oil and gas shipments from a new pipeline between Basra, Iraq and Aqaba, Jordan. In short, the current 7% of world oil that passes through the Red Sea could meet, if not surpass, the amount flowing through the Persian Gulf.
If this new Cold War was not enough, the thaw of relations between Ethiopia and Eritrea means that a new player could soon emerge, and one that expects to be taken seriously on the regional stage.
The Red Sea offers a few added risks. Unlike the Persian Gulf, there is little in the way of a set pattern to indicate how major regional powers will operate. It is a given that Saudi Arabia and Iran will act to foil one another, but few such precedents exist in the Red Sea. Culturally, while most Muslim powers in the region are Sunni, there are doctrinal differences between Hanbali Saudi Arabia, Hanafi Turkey, and Maliki Sudan. The addition of an Orthodox Ethiopia will only complicate matters.
In any event, with the Suez in play, it may not just be energy prices at play — given the importance of the Red Sea to global commerce, this could have far-reaching consequences on everything from energy to electronics.
