A lifeline under threat: Why the Suez Canal’s security matters for the world

Economy & Business International Markets Maritime Security Middle East Trade

Issue Brief March 20, 2025

A lifeline under threat: Why the Suez Canal’s security matters for the world

Introduction

The Suez Canal is both a maritime choke point and a vital waterway for global trade and energy security. The 193-kilometer canal connecting the Red Sea and the Mediterranean:

Attracts about 12 percent to 15 percent of worldwide trade and about 30 percent of global container traffic—with more than $1 trillion in goods transiting annually.
Includes roughly 9 percent of global seaborne oil flows (about 9.2 million barrels per day in early 2023) and around 8 percent of liquefied natural gas (LNG) volumes.
Averages fifty to sixty ships transiting the canal daily, carrying an estimated $3 billion to $9 billion in cargo value.
Generates toll revenue—a major economic lifeline for Egypt—with a record of $9.4 billion set in 2022–2023.

Given its strategic role as the fastest sea route between Asia and Europe, any disruption to the Suez Canal can have outsized impacts on global commerce and energy markets, which have occurred in recent years. Minimizing such disruption is an international concern. It requires diplomacy and collaboration to bolster Suez area security and capacity building to protect trade flows and supply chains, reduce shipping and insurance costs, and foster a stable supply of energy.

Historical conflicts and impacts

The canal’s strategic importance has repeatedly made it a flash point during geopolitical conflicts. In late 1956, after Egypt’s President Gamal Abdel Nasser nationalized the canal, an invasion by Britain, France, and Israel led to the Suez Crisis, during which the canal was closed from October 1956 until March 1957. Though the closure lasted only about five months, it disrupted shipping significantly; hundreds of vessels were forced to reroute around the Cape of Good Hope, increasing transit times and costs. The crisis underscored the canal’s leverage in Cold War geopolitics and ended with Egypt retaining control, but only after international pressure forced invading forces to withdraw.

A decade later, as the Six-Day War began in June 1967, Egypt closed the Suez Canal again as it became the frontline between Egyptian and Israeli forces. This time the waterway remained shut for eight years—the 1967–1975 closure—a disruption unprecedented in the canal’s history. At the time, a large share of Europe’s oil imports depended on the Suez, so the closure forced a massive diversion of trade. Global shippers again opted for the long alternate route around Africa, adding roughly 8,000 to 10,000 kilometers to voyages. This led to higher freight costs and transit delays on a global scale. The prolonged closure spurred structural changes in the industry: Shipping companies turned to larger “supertanker” oil vessels capable of economizing on the longer route around the Cape of Good Hope, and Egypt, in turn, built the Sumed pipeline (completed in 1977) to transfer oil from the Red Sea to the Mediterranean as a substitute link. The canal finally reopened in June 1975 after extensive mine-clearing and salvage operations, and plans got underway to expand the canal. By then, global trade patterns had partly adjusted—for example, new oil fields outside the Middle East and alternate routes had reduced reliance on the Suez route—but the reopening restored a critical artery for Europe-Asia trade.

Figure 1: The extended economic impact of incidents in the Suez Canal

Event	Period	Key economic impacts
^{Suez Crisis}	^1956-1957	^{-Canal closed for about five months. –Tens of millions of pounds were lost from the UK foreign exchange reserves. –1.5-percent depreciation of pound sterling vs. US dollar. -About 33-percent increase in global oil prices.}
^{Arab-Israeli wars}	^1967–1975	^{–$250-million annual loss for Egypt in transit fees. -The canal’s closure cost the world about $1.7 billion in lost trade and higher shipping expenses –6,000 miles added to Europe-Asia voyages. -Significant increases in supertanker usage for oil transport due to Suez closure.}
^{Iran-Iraq War}	^1980–1988	^{• More than 450 ships attacked. •} ^{50-percent rise in Persian Gulf shipping insurance rates (1984). •} ^{At the onset of the war, Iraq and Iran halted their oil exports through the Gulf, effectively removing 2.7 million barrels of oil a day from world markets. •} ^{30 percent reduction in Suez Canal traffic.}
^{Somali piracy}	^2005–2012	^• ^{Estimated costs of $6.6 billion in 2011. •} ^{10-percent decrease in Suez Canal ship traffic •} ^{$3.5 million per year additional fuel costs per rerouted ship.}
^{Ever Given blockage}	²⁰²¹	^• ^{0.3-percent of merchandise trade affected in that year. •} ^{$14 million to $15 million in daily loss of canal revenue. •} ^{$400 million tons of cargo per hour. •} ^{Overall losses totaled $88.79 million, including ship, environmental, and inventory costs.}

In the decades since 1975, the Suez Canal has largely stayed open amid regional conflicts, though security has been tested at times. During the 1973 War, the canal zone itself was a battleground, delaying its clearance and reopening until a peace accord was in place. More recently, unrest during the Arab Spring and insurgency in Egypt’s Sinai Peninsula raised concerns. In 2013, for instance, militants attempted a terrorist attack on a passing container ship (the COSCO Asia) in the canal, firing rockets in an effort to disrupt traffic. Egyptian forces foiled that attack. No damage was done and transits continued uninterrupted—but the incident highlighted persistent security concerns. Overall, historical episodes show that geopolitical conflicts can rapidly threaten the Suez Canal’s operability, leading to costly rerouting of ships and prompting defensive measures to safeguard this vital corridor.

Recent Middle East conflicts and disruptions

Ongoing conflicts in the Middle East have recently impacted the Suez route, including the Red Sea attacks (2023–2024). In late 2023, the Israel-Gaza war triggered a wave of attacks on commercial shipping in the Red Sea/Bab el-Mandeb region by Yemen’s Houthi rebel movement. The Iran-aligned Houthis openly portrayed their attacks as retaliation in solidarity with Palestinians amid the Gaza war. Starting in November 2023, they launched scores of missile and drone strikes targeting ships bound to or from the Suez Canal, and even seized a cargo vessel in the southern Red Sea. Houthi militants claimed to have attacked more than 130 ships in the Red Sea and Gulf of Aden after the war in Gaza erupted in October 2023. This campaign saw several merchant ships damaged—and some crew members injured or killed—by anti-ship missiles. By mid-2024, the assaults had escalated to the point of sinking at least one commercial vessel and igniting others, dramatically underscoring the threat to shipping.

The immediate impact of these attacks was a widespread reassessment of the safety of the Suez route. Many global shipping companies reacted by diverting or suspending routes that would normally transit the Red Sea and Suez Canal. Between mid-December 2023 and late December, at least thirteen major shipping operators, including the world’s largest container lines, announced they were indefinitely suspending voyages via the Red Sea or to Israeli ports. Shipping disruptions included MSC (the world’s biggest container carrier) and others stating they would temporarily avoid the Suez Canal path due to the security risks. The Suez Canal Authority (SCA) reported that from November 19 to mid-December, fifty-five ships had rerouted around the Cape of Good Hope instead of using the Suez Canal, although more than 2,100 ships still transited the canal in that period. This indicated that while a core of traffic continued, a growing number of shipowners chose the longer but safer route around Africa, requiring additional capacity to provide key services for the longer route and ultimately increasing costs and travel time. Notably, certain vessel categories virtually vanished from the canal at the height of the crisis. By June 2024, Suez transits of dry bulk cargo ships were down nearly 80 percent on a year-to-year basis as operators rerouted grain and ore shipments to avoid the Red Sea stress zone. Major energy companies were also alarmed. In December 2023, oil major BP paused all tanker transits via the Red Sea until the situation stabilized.

The Red Sea attacks prompted unprecedented international responses to protect the Suez waterway’s approaches. The United States, European nations, and regional allies stepped up naval patrols and even carried out strikes on Houthi launch sites to deter attacks. By late 2023, a US-led coalition (including forces from the United Kingdom, France, and other nations) was conducting retaliatory strikes against Houthi missile and drone infrastructure in Yemen. Several nations moved to escort shipping directly: China’s navy, for example, began providing armed escort to Chinese commercial vessels through the Red Sea starting in January 2024. Despite these efforts, sporadic attacks continued into late 2024, creating a climate of high alert. Only after a tentative ceasefire in Gaza, and amid international diplomatic pressure, did the Houthi group ease its campaign. In early 2025, the Houthis announced a halt to attacks on vessels not linked to Israel, leading the Suez Canal Authority to urge shipping lines to return to their normal routes amid signs of stabilizing conditions. By February 2025, no new attacks had been reported for several weeks, but these episodes served as a stark reminder of how quickly a regional conflict can threaten the security of a global trade artery.

Impact on global trade and economy

The disruptions arising from conflict around the Suez Canal have had immediate and far-reaching economic effects, including on trade flows and supply chains. Vessel attacks and rerouting in the Red Sea effectively throttled Suez traffic in late 2023 and early 2024. In fact, the volume of trade passing through the Suez Canal dropped by about 50 percent in the first two months of 2024 compared with a year earlier. Dozens of ships that would normally use the canal instead took the long way around Africa, causing the volume of goods shipped via the Cape of Good Hope to surge by about 74 percent as shippers improvised alternate paths. This detour adds roughly ten or more days to Asia-Europe voyages on average, straining just-in-time supply chains. Companies that rely on fast turnarounds—from electronics manufacturers to retail suppliers—suddenly needed to cope with extended transit times and uncertain delivery schedules. By January 2024, port call data showed ripple effects: Weekly ship transits through the Bab al-Mandab Strait, for example, plunged to roughly nineteen per day, down from a normal level of seventy or more in prior months. Such a sharp decline in Red Sea traffic implies a significant temporary loss of global shipping capacity, as a large share of the world’s container and bulk fleet was pushed onto longer routes.

One immediate consequence of these longer routes and convoy delays was a spike in transportation costs. Industry analysts estimated that the effective global shipping capacity shrank by about 20 percent during the crisis (as ships spent far longer in transit). This capacity crunch drove up freight rates on major trade lanes. Container spot rates for Asia-Europe routes, which are heavily dependent on Suez, began rising as carriers needed to deploy more vessels to maintain schedules and as available space tightened. Rerouted ships also experienced congestion in alternate ports (e.g., in South Africa and Southeast Asia) as traffic patterns shifted. All these factors increased operating costs for carriers, which were passed on to shippers–and ultimately to consumers. Studies by the International Monetary Fund have noted that if such disruptions persist, they can put upward pressure on inflation in affected economies due to costlier imports and shipping delays. European importers, for instance, faced both longer lead times and surcharges on freight in late 2023, complicating inventory management and production schedules.

Shipping containers pass through the Suez Canal in Suez, Egypt February 15, 2022. Picture taken February 15, 2022. REUTERS/Mohamed Abd El Ghany

The security situation also led to soaring marine insurance costs for voyages via the Red Sea and Suez. Insurers designated much of the Red Sea as a high-risk war zone, imposing additional premiums on hull and cargo coverage. War-risk insurance premiums—which had previously been a nominal 0.05-0.1 percent of a vessel’s value—surged to as high as 1-2 percent of ship value per transit in late 2023. Likewise, cargo insurance rates for shipments through the region spiked. Policies that typically cost about 0.6 percent of cargo value climbed to roughly 2 percent in the aftermath of the attacks. These hikes meant that a large container ship (or its cargo) faced millions of dollars in extra insurance costs for a single Suez passage. Such expenses made the Suez route financially unviable for many vessels at the height of the conflict—further incentivizing detours around Africa despite the longer journey. Even as of early 2024, some insurers remained reluctant to cover Red Sea transits at all, requiring shippers to seek specialized coverage or government guarantees. The net effect was sharply increased operating costs for any ships brave enough to continue through the canal during the hostilities, adding to the economic toll.

Geopolitical strife affecting the Suez area also reverberates through energy markets and influences trade patterns. The canal and its associated pipelines (like Sumed) are key conduits for Middle Eastern oil and LNG exports to Europe. Disruptions here can contribute to oil price volatility: For example, news of the Red Sea attacks in late 2023 helped push Brent crude oil prices up as markets priced in potential supply delays. During the recent conflict, southbound oil transit through the Suez fell by half, from about 7.9 million barrels per day (bpd) in 2023 to only about 3.9 million bpd in 2024, as many tankers rerouted or deferred voyages. Some mitigation came from rebalancing flows. Notably, Russia shifted large volumes of crude to Asia via the Suez Canal (after the European Union imposed sanctions), which kept certain Suez oil traffic robust despite the turmoil. However, other petroleum streams were heavily disrupted. Virtually all jet fuel shipments to Europe stopped using the Suez route once the attacks began (only about 2 percent of global seaborne jet fuel now transits the canal). Instead, tankers opted to go around the cape or use alternative pipelines. These shifts illustrate a broader point: extended conflicts can trigger higher risk for an extended period. Certain cargoes might not immediately return to the Suez route even after tensions ease, especially if insurers and shippers perceive lingering risks. Additionally, the mass diversion of ships around Africa has an environmental cost—longer voyages mean higher fuel burn and emissions. It’s estimated that rerouted ships traveling 50-60 percent farther produced roughly 40 percent more carbon dioxide emissions per voyage than traveling via the Suez Canal, highlighting a climate impact alongside economic costs.

Conclusion and outlook

Ensuring canal security

The recent disruptions underscore that the Suez Canal’s strategic vulnerability is an international concern. Stability in the waterways connecting to the canal (e.g., the Red Sea, Bab el-Mandeb, and the Eastern Mediterranean) is critical for uninterrupted commerce. A key policy lesson is the importance of proactive security and diplomatic measures to protect this choke point. Egypt already maintains a robust military presence to secure the canal itself, but the Red Sea attacks revealed the need for a broader cooperative security framework—potentially involving regional states and global naval powers—to ensure safe passage in surrounding seas. Going forward, multinational maritime patrols or convoy arrangements in the Red Sea could be considered during periods of high risk (such as past anti-piracy operations or the tanker convoys in the Persian Gulf during the 1980s).

Enhanced intelligence sharing and early-warning systems could help merchant fleets avoid danger. Diplomatically, addressing the root conflicts is paramount: a temporary ceasefire in the Israel-Palestine arena helped directly reduce attacks on shipping. International mediation in Yemen and dialogues with Iran are likewise crucial to prevent future flare-ups that threaten Suez traffic. Policy coordination, whether through the United Nations International Maritime Organization (IMO) or coalitions of concerned nations, will be needed to bolster the security of global shipping lanes in this region. Treaties and agreements, such as the UN Convention on the Law of the Sea (UNCLOS), provide a legal foundation for international collaboration in maritime security efforts. By adhering to these frameworks, countries can formulate joint strategies, share best practices, and coordinate response mechanisms to maritime insecurity.

Table 2: Examples of key collaborative maritime security initiatives

Collaborative maritime security initiatives
^{Combined Maritime Forces (CMF)}	^{Founded in 2001, the CMF is a multinational naval partnership aimed at promoting maritime security in the Gulf of Aden, the Arabian Sea, and the wider Indian Ocean region. Comprising more than thirty member nations, the CMF conducts operations to deter piracy, protect shipping lanes, and ensure maritime trade security. This collaborative approach has significantly reduced piracy incidents off the coast of Somalia, illustrating the effectiveness of pooled naval capabilities.}
^{Operation Atalanta}	^{The European Union launched Operation Atalanta in 2008 to combat piracy in the waters off the Horn of Africa. This mission involves deploying naval vessels from multiple European nations to protect shipping lanes, provide humanitarian aid, and support capacity-building efforts in regional maritime forces. By working collaboratively, participating countries have been able to enhance the security of vessels transiting high-risk areas, thus restoring confidence in maritime operations.}
^{Djibouti Code of Conduct}	^{This regional agreement, initiated under the auspices of the IMO, aims to enhance cooperation among countries in the western Indian Ocean to combat piracy and armed robbery at sea. It encourages information sharing, capacity building, and collaboration in addressing security threats, effectively fostering a cooperative approach among countries to safeguard maritime trade in the region.}

Other maritime routes are emerging, but they remain insufficient. Climate change is gradually opening the Northern Sea Route (NSR) along the Russian Arctic, which raises the prospect of an Asia-Europe sea route that circumvents the Suez Canal. However, Arctic routes are not yet commercially viable for mainstream shipping: seasonal ice, specialized vessel needs, and a lack of infrastructure pose significant challenges. In the foreseeable future, the NSR will remain a limited-use route for specific ships and seasons, rather than a full alternative to the Suez Canal.

Meanwhile, the Cape of Good Hope route will continue to be the primary backup when the Suez is impassable, despite its longer distance. This reality was underscored during the Red Sea crisis. When faced with danger, the shipping industry’s only immediate large-scale alternative was essentially to go around Africa. While effective as a stopgap, that solution carries significant economic, logistical, and environmental costs, reinforcing why maintaining the Suez’s accessibility is so crucial.

Strengthening the canal’s infrastructure resilience

There is a policy impetus to build infrastructure resilience into existing trade corridors. The Suez Canal itself has undergone upgrades: For example, the 2015 expansion created a second channel section to allow two-way traffic and reduce transit time. Further investments by Egypt aim to increase the canal’s capacity and enable it to handle even larger vessels. Additionally, ports and logistics hubs on alternative routes are being enhanced to handle diverted traffic during emergencies. Such investments, often with support from development banks, seek to alleviate bottlenecks when trade shifts unexpectedly due to conflict or crisis.

Investment in technological solutions, training, and capacity building

International cooperation in maritime security can also extend to technological advancements. Countries can work together to develop and deploy surveillance systems, maritime domain-awareness tools, and advanced communication networks to monitor shipping activities effectively. For example, the Automatic Identification System (AIS) allows vessels to broadcast their location in real time, helping authorities to track maritime traffic and respond to security threats proactively. Joint investments in such technologies can enhance situational awareness and risk assessment, ensuring swift and effective responses to potential emergencies.

Investment in international training programs for naval forces and coast guards can further bolster maritime security. Collaborative efforts such as joint exercises, workshops, and exchange programs can equip personnel with the skills and knowledge needed to respond effectively to maritime challenges. For instance, the US Navy’s Partnership for Peace Program promotes military-to-military cooperation and training among countries, enhancing their ability to manage maritime responsibilities and contingencies. This collaborative effort can be further developed.

Policymakers and industry leaders will need to collaboratively safeguard the Suez Canal’s continuity, through security cooperation and contingency planning, to ensure that geopolitical conflicts do not again choke off one of the world’s most important trade arteries. The recent disruptions serve as a call to action to reinforce the resilience of global supply chains against such shocks.