Eilat Port Operations Halted Amid Yemeni-Houthi Blockade

The southern Israeli port of Eilat has ceased operations as of Sunday, primarily due to significant financial distress linked to a sharp decline in shipping activity. This downturn is attributed to the ongoing Yemeni-Houthi blockade of the Red Sea, marking a rare setback for Israel in the region. The blockade has not only impacted maritime trade but also raised concerns about national security and economic stability.

Constructed between 1952 and 1956 and opened for traffic in 1957, Eilat port has played a crucial role in Israeli maritime trade, accounting for approximately 5-7 percent of the country’s total. The port has facilitated the import of around 150,000 vehicles from China in 2023, which typically supplies up to half of Israel’s car imports. Additionally, crude oil is piped from Eilat to Ashkelon for refining, while various exports, including potash and fertilizers, have historically flowed through the port.

The situation escalated in November 2023 when Houthi forces began launching attacks on vessels associated with Israel, the United States, and the United Kingdom. These attacks included missile and drone strikes aimed at both shipping and the city of Eilat. The escalation followed the October 7, 2023 assault by Hamas, which resulted in the deaths of 1,200 individuals and the abduction of 150 in southern Israel. As a direct consequence of the conflict, Eilat’s shipping activity plummeted by 85 percent by December, and by March 2024, the port had temporarily suspended half of its staff, although salaries remained paid.

The port’s closure poses a potential risk to the Israeli navy, which operates patrol boats from its base in Eilat, providing security for the naval shipyard. In an attempt to mitigate financial challenges, the Israeli government allocated an emergency grant of $4 million (approximately €3.4 million) in June. Despite this effort, the Eilat Port Company has amassed debts exceeding $8.5 million, leading the municipality to freeze $3 million in the port’s bank accounts to address tax arrears.

Major shipping companies, including Maersk and Hapag-Lloyd, have redirected their vessels around the Cape of Good Hope, significantly increasing transportation costs by 30-40 percent for goods destined for Mediterranean ports. This rerouting has also extended transit times by approximately seven to ten days. Furthermore, insurance premiums for vessels navigating the Red Sea have skyrocketed by 300-400 percent.

While Houthi attacks have diminished recently and the Israeli navy has offered to protect ships in the area, the perception of risk remains high among shipping owners. As a result, the future of Eilat port and its contribution to Israeli trade hangs in the balance, with broader implications for the region’s economic landscape and security frameworks.