RR The Wire 2200Z January 03, 2024

PRECEDENCE: ROUTINE RR

DTG: 220003Z JAN 24

ICOD: 210003Z JAN 24

CONTROLS: Public Release

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BLUF: MIDDLE EAST CONFLICT INTESIFIES FOLLOWING TERROR ATTACK IN IRAN.

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-International Events-

Middle East: Tensions escalate throughout the region in response to multiple developing events. In Iran, a terror attack kills hundreds of citizens as multiple explosions occur at a memorial ceremony at Qassem Soleimani's gravesite in Kerman. Attacks on U.S. military bases in Iraq and Syria have increased in severity, and U.S. Navy ships in the Red Sea have experienced more deliberate targeting by Yemeni forces over the past few days. Skirmishes along the Lebanese border with Israel, already having intensified over the past few days, were renewed in earnest following the attack in Iran. Heavy Hezbollah rocket attacks have targeted locations deep inside Israel, and fighting has broken out at border checkpoints and observation posts along the Lebanese border. AC: It is too soon to tell if this is a true, deliberate widening of the war, or if this is a limited/temporary response to the attack in Iran.

Red Sea/HOA: U.S. Naval forces continue to intercept Yemeni cruise missiles, which have been targeting both U.S. Navy ships, and the few ships transiting the Red Sea. Despite statements from shipping companies confirming the resumption of normal operations, very little commercial traffic is actually transiting the Red Sea.

Europe: German farmers plan a nationwide protest for January 8th. This demonstration is looking to be one of the largest in Europe’s recent history as multiple rail worker and trucking unions team up with agricultural associations to protest in opposition to several taxation issues.

Analyst Comments:

Always considering the fact that ships can turn off their AIS transponders, it’s still very clear that almost all commercial shipping is avoiding the Red Sea. For maritime safety reasons (and in order to transit the Suez Canal) ships have to turn on their transponders at some point in their journey. If ships were “disappearing” from tracking websites as they approach Yemen, then “reappearing” suddenly in the northern Red Sea, this would be a strong indicator of this tactic being used. After more than two weeks of crisis this does not appear to be the case, and almost all traffic that would be normally transiting the Red Sea, is now taking the longer route around Africa. Maritime shipping companies may commit to sending a handful of vessels through the Red Sea to mislead shareholders and keep up the pretenses that everything is fine, but sooner or later the impossibility of concealing merchant shipping realities will be acknowledged, almost certainly in the form of higher shipping costs. The follow-on effects of which will be felt by the average consumer.

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Analyst: S2A

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