Petrol and gasoline prices set to go higher

**Gideon Long** (0:01)
More shipping disruption, and this time it's in the Red Sea. It's World Business Express from the BBC World Service. I'm Gideon Long.
We'll also tell you about a rare piece of Chinese US business cooperation, and the exorbitant price of eggs in Myanmar.
Oil prices have spiked sharply today, and guess what? It's not to do with the Strait of Hormuz. No, today it's because the Houthis in Yemen have attacked shipping in another strategic waterway, the Red Sea. They say they hit two Saudi Arabian oil tankers. The Saudis say one. US. Secretary of State Marco Rubio was asked about this at a summit in the Philippines.

**Marco Rubio** (0:45)
The Houthis have done that in the past, as you know. They've threatened global shipping there in the past. And again, anything that restricts shipping through the Red Sea would be problematic, for the same reasons that the Strait of Hormuz is problematic. So it's not a new threat. We hope it can be de-escalated.

**Gideon Long** (0:59)
So have the attacks had an impact on shipping today? Michelle Visa-Bachman is from maritime intelligence company, Winwood.

**Michelle Visa-Bachman** (1:06)
Yeah, definitely. We've seen vessels diverting and vessels going dark. So turning off their vessel tracking transponders so they can't be seen via conventional AIS, automatic identification signals.

**Gideon Long** (1:19)
And when they turn away, what's their alternative? Do they just have to stay put until things improve?

**Michelle Visa-Bachman** (1:25)
Well, in the cases that we're tracking, they have diverted on the approach to the Gulf of Aden and they've gone up to the Middle East Gulf and the Gulf of Oman. So we're uncertain whether they'll get any business there because of course we have the Southern Corridor imperiled by Iran's Revolutionary Guard and transits at a trickle and 11 attacks on vessels there since June 25

**Gideon Long** (1:49)
So how many ships are going through the Red Sea anyway at the moment? Because as Marco Rubio said, this is not the first time that the Houthis have attacked ships. They did it from 2023, 2024 onwards in response to the Gaza conflict, forcing ships to take the long route around the bottom of Africa. Have ships largely returned to the Red Sea since then or have they still been taking the long route due to safety concerns?

**Michelle Visa-Bachman** (2:11)
Well, traffic never really was fully restored through the Red Sea and Suez Canal as a result of the Houthi actions. A lot of Western affiliated vessels have kept a wide berth, but we're now expecting to see a further drop because the risk to maritime safety and security is acute.

**Gideon Long** (2:32)
And there are some fears, aren't they, Michelle, that the Houthis will try to block the Bab el Mandab Strait, which is leading to the Red Sea. And that's only 26 kilometres across at its narrowest point. Could they do that? And if they did, worst case scenario, we have a situation in which the Strait of Hormuz and the Red Sea are dangerous for shipping. What impact could that have?

**Michelle Visa-Bachman** (2:50)
Well, they could do it, but I don't think they will. And I'll tell you why.
Since late 2023, they have essentially given a free pass to vessels from Russia and China. So a lot of Chinese crude will flow through the Suez Canal, through the Red Sea to India and China. And we're also seeing some Chinese VLCCs, very large crude carriers that loaded at Saudi, actually sailing through the Strait of Bab el Mandab now. So will they still get their free pass despite the blockade? We don't know. We need to wait for a little bit more clarity to really see where the Houthis are going to draw the line.

**Gideon Long** (3:29)
Michelle, Visa Bachman from Wynwood. Well, inevitably this news has pushed up oil prices. I'm joined by Nicholas Hyatt, analyst at Hargreaves Lansdowne in London. Nicholas, tell us the worst. Where are we at the moment?

**Nicholas Hyatt** (3:42)
Rent crude is about 6.8% today, so just over $100 a barrel. And that's the highest it's been since May.

**Gideon Long** (3:49)
Well, a few days ago, we saw that those high fuel prices had really hit profits at Ryanair. And today we've had news from Ryanair's rival, EasyJet, and also from American Airlines. What have they said?

**Nicholas Hyatt** (3:59)
Well, EasyJet is a very similar story to Ryanair. There's a slight improvement in customer bookings, but still below last year. Fuel costs have weighed on profits, but around 79% of fuel costs are hedged out. So the impact is lower than it could have been.
It's quite a different story at American Airlines. They've seen revenue rise 16.3% in the three months to June, which sounds great, but higher fuel prices means they're going to struggle to post profit in Q3. And that's quite a bit worse than they initially suggested.