The Suez Canal crisis: How Houthi attacks are crippling Egypt’s revenue

Over the past decade, Egypt has set ambitious goals for the future of one of the world’s most crucial trade routes and a cornerstone of its not insignificant rentier economy: the Suez Canal. In 2015, a major project to widen a section of the historic canal, linking the Red Sea to the Mediterranean, was completed in record time. By 2021, efforts were underway to extend this second canal, with its successful first test completed by the end of December.

The goal remains unchanged: to accommodate more ships and larger vessels in less time, in order to boost revenue. However, since the end of 2023, the Suez Canal has experienced an unexpected slowdown. Yemen’s Houthi rebels, recognizing the canal’s strategic importance, have disrupted maritime traffic. Since November 2023, the Houthis have carried out approximately 250 attacks on ships in the area, according to conflict data collection organization ACLED. Their objective? To pressure the world into pushing Israel to halt its military operations in Gaza.

The consequences have been significant: while an average of 72 ships, carrying 4.4 million tonnes of cargo, crossed the canal per day in mid-December 2023, by the end of that month, only 27 ships were passing through, with a quarter of the previous cargo, according to the Portwatch platform. The rest now choose to circumnavigate Africa.

During a press briefing in late 2024, Egypt’s Foreign Minister Badr Abdelatty confirmed that revenue from the Suez Canal had plummeted by about 60%. The Egyptian presidency reported a loss of around $7 billion in revenue for 2024. The chairman of the Suez Canal Authority, Osama Rabie, also noted that by October, more than 6,500 vessels had altered their routes.

150 years of turbulent history

The current challenges are far from the first setbacks in the Suez Canal’s more than 150-year history. One of the most high-profile crises occurred less than four years ago, when the mega-ship Ever Given became stuck for six agonizing days in the canal, blocking hundreds of ships.

Perhaps the most unusual crisis the canal has faced, however, arose during the 1967 regional conflict, known as the Six-Day War. The Israeli occupation of the Sinai Peninsula transformed the canal into a natural ceasefire line, leading to its closure. In the ensuing chaos, 14 ships and their crews were trapped in a lake in the middle of the canal, where they remained for eight years. During that time, the crews — nicknamed the Yellow Fleet — even formed an association and organized Christmas celebrations and Olympic Games in “no man’s land.”

The situation today is compounded by Egypt’s deepening economic crisis. By mid-2024, at the end of its fiscal year, the country had a current account deficit exceeding $20 billion, driven largely by the decline in Suez Canal revenues and a large trade deficit. To address this, Cairo has resorted to controversial measures, such as selling off large tracts of land and continuing to take on more debt

Despite these difficulties, Egyptian authorities remain confident that disruptions to the Suez Canal are temporary. They argue that no other navigable route can compete with the canal’s strategic position between Asia and Europe. This confidence is reflected in their plans for the future: in March, they announced that they are studying another expansion of the canal, which would build on the 2021 project and ensure that, once current disruptions end, the canal can accommodate more ships, of larger size, and operate more efficiently.

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