How liquidity foresight predicts conflict — and why it matters now
Rising attacks, sunken cargo ships, and soaring insurance premiums reveal the true cost of potential shifts in Middle East liquidity flows.
A few weeks ago, I published an analysis piece titled “Trump Just Gave China the Green Light to Buy Iranian Oil.” In it, I explained how this shift would effectively cut the Houthis out of their existing role as intermediaries smuggling Iranian oil to China, forcing them to find new ways to maintain influence and generate revenue — including more direct, escalated attacks.
As predicted, the Houthis have escalated their attacks. Their latest attack — likely the deadliest since they began these maritime operations — killed at least three crew members. At present, only six of the 25 onboard have been rescued, according to the joint European naval force.
The ship involved — the Liberia-flagged Eternity C — now sits at the bottom of the Red Sea. Sinkings are rare: only two ships were sunk by the Houthis between November 2023 and January 2025. This deliberate, full-on attack on the Eternity C signals a clear and dangerous escalation.
The financial costs have already been staggering. Before 2023, an estimated $1 trillion worth of cargo transited the Bab al-Mandeb Strait each year — a critical chokepoint connecting European and Asian markets.
Since the conflict began, shipping insurance premiums have skyrocketed, rising from a maximum of 0.4% of a ship’s total value to as high as 1%. For a vessel and cargo worth $100 million, that means the premium jumped from $400,000 to $1 million for a single journey. These rates have held firm since the initial attacks, and this latest escalation could drive them even higher.
At the same time, the Houthis take in an estimated $2 billion per year from ships willing to pay ransom to transit Yemeni waters, making kinetic attacks a lucrative, albeit riskier, alternative to Iranian oil smuggling.
If you’re wondering why global inflation persists, this is part of the story.
Between the Lines
This isn’t just about one group or one sea lane. It demonstrates a core principle:
Liquidity is sovereignty. Follow the flows, and you can see tactical shifts long before they make headlines.
I share these analyses to help readers and clients move beyond reactive noise and understand the deeper infrastructures driving global conflict and influence.
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Stay sharp,
Adam