This would result in a shortage of valuable commodities, with an estimated $780 billion (£615 billion) dollars' worth of crude oil, clothing and cars being disrupted, says Russell analysis.

Trade in the Red Sea represents around 12% of all world trade.

Continued attacks by Houthi Rebels on ships entering the Red Sea, which has provoked the US-UK military response with air strikes on Yemen, has drastically reduced the number of ships entering the Red Sea.

Crude Oil, which makes up 17% of all annual trade through the Suez Canal and the Red Sea, at $496 billion (£391 billion) would be the largest commodity that would be impacted by a closing of all trade through the canal. 

The delivery of cars will be impacted, as an estimated $178 billion (£140 billion) worth of cars is imported through the Red Sea annually. Some car manufacturers such as Tesla have suspended production due to feared shortages from the Red Sea. 

Clothing shortages would be expected too, with $105 billion (£82 billion) of clothing imported through the Red Sea annually. Some UK retailers, including Next, have already warned of supply chain delays. 

Suki Basi, Russell Group’s Managing Director commented on the figures:

“Once again, global trade is experiencing another external shock that could cause economic headwinds to blow across the global economy.

There is a persistent squeeze on living standards across many economies, including the UK, so it will not be welcome news for consumers, policymakers and businesses to hear of more potential price rises due to shortage of key commodities. 

However, let’s not forget that the Red Sea crisis is not a single isolated event impacting global trade. There is a crisis brewing in the Panama Canal due to a shortage of water. Potentially, two of the world’s crucial shipping lines may be at risk of being closed off or seeing a large fall in volume. 

Therefore, what these events demonstrate time and time again, is that such threats are connected, and their combined ripple effect is having a significant impact on the global economy, requiring forward looking insights and analysis.”