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The Red Sea strait is crucial for 30 per cent of global container traffic and 12 per cent of global trade. About 80 per cent of India's merchandise trade with Europe passes through this route.
The world's biggest sunflower oil buyer typically sources most of its imports from the Black Sea region via the Red Sea. However, recent Houthi attacks have compelled shipping companies to reroute trade between Europe and Asia around Africa, increasing time and costs.
Attacks on vessels in the Red Sea are disrupting shipments of perishable food items, potentially leading to higher prices for consumers and a slowdown in food inflation.
The US conducted airstrikes on Houthi targets in Yemen after the group's attacks on shipping in the Red Sea. The Houthi rebels have demanded an end to Israeli bombings in Gaza as a condition to stop their disruptions.
However, demand is not expected to be affected unless the unrest persists for extended period