BBC: Both Prime Minister Rishi Sunak and US President Joe Biden cited the global economic impact of Houthi attacks on Red Sea cargo ships in overnight statements as the reasoning behind military action.
The Treasury has modelled scenarios suggesting that disruption in the Red Sea could further shrink the UK economy, risking a recession.
The main fear in the Treasury's analyses is of a rise of at least $10 per barrel in the international price of crude oil and a 25% increase in the price of natural gas.
Rises such as these have not actually materialised, so far, mainly because of the actions of Saudi Arabia - the major oil producing nation - in soothing global energy markets with price cuts.
The US and UK will hope that their overnight strikes on Iran-backed Houthi rebels will help reverse widespread delays and disruption to Red Sea trading routes, by re-establishing safe passage through the Bab-al-Mandeb Strait into the Suez Canal.
But, on the other hand, there is now also a clear pathway of escalation to a wider Middle East conflict. » | Faisal Islam, Economics editor | Friday, January 12, 2024
