Suez Canal revenue losses mount to $7 billion as Red Sea conflict escalates

Egypt is facing a dramatic decline in revenues from the Suez Canal, with losses expected to exceed 60% in 2024, amounting to around $7 billion, Osama Rabia, the head of the Suez Canal Authority, said.

According to the Egyptian leader’s spokesman, Mohamed al-Shinawi, Rabia made this revelation during a meeting with President Abdel Fattah al-Sisi, Caliber.Az reports citing Russian media.

Rabia explained that the significant drop in profits from the Suez Canal operations is primarily attributed to the ongoing instability in the Red Sea, especially around the Bab el-Mandeb Strait. He stated that, compared to 2023, revenue from the canal’s operations has already decreased by more than 60% due to these "current developments" in the region. Rabia also noted that the crisis has negatively impacted shipping volumes and disrupted global trade. "The crisis in the Red Sea has had a negative impact on shipping volumes in the canal and on the sustainability of all global trade," Rabia said.

In a separate remark, Egyptian Foreign Minister Badr Abdel Aty, speaking at the "Mediterranean Dialogues" conference in Rome on November 25, highlighted how Egypt has suffered the most from the worsening situation in the Red Sea. He pointed out that Egypt loses approximately $600 million each month in potential canal revenue. "The total losses since the beginning of the conflict amount to at least $8 billion," he added.

The Suez Canal is one of Egypt’s most crucial revenue sources, contributing over $10 billion in the 2022-2023 fiscal year. The canal is vital not only for Egypt’s finances but also as a critical route for global trade. However, since the autumn of 2023, the country has seen a significant decline in profits, with many ships rerouting to avoid the dangers of the region. This shift in shipping routes is largely due to the actions of the Yemeni rebel group Ansar Allah (Houthis), who have been actively targeting civilian vessels in the Red Sea and Gulf of Aden.

Following the escalation of the Gaza conflict in October 2023, the Houthis vowed to prevent ships associated with Israel from passing through the Bab el-Mandeb Strait and threatened to attack any vessels travelling through the region. Since mid-November, the Houthis have targeted dozens of vessels, further exacerbating the situation for Egypt. This instability has led to fears among shipping companies, which are now seeking safer alternatives to avoid potential attacks by the Houthis.

By Tamilla Hasanova