
Trade with Yemen and Risks in the Red Sea
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- Trade with Yemen and Risks in the Red Sea
Sanctions compliance and operational maritime safety remain areas of heightened concern, and Members who intend to engage in trade connected to Yemen are recommended to exercise extreme caution. This guidance is for information only and is subject to change depending on the developing situation in the region. Decisions regarding the use of armed security, trade routes, or implementing other protective measures rest entirely with the vessel operator.
Members’ attention is drawn to the International Group (IG) circular published on 28 April 2025 and a Club circular published on 22 January 2024 which highlights sanctions updates in connection to Yemen and the legal implications on shipping in the Red Sea.
Sanctions considerations
- Ansarallah Involvement: Transactions involving Ansarallah (‘Houthis’) present significant sanctions risk exposure. Particular attention must be given to dealings or transactions with entities owned and controlled (50% or more) by Ansarallah and be treated as high-risk counterparties.
- Petroleum Products: There are restrictions on the delivery, offloading, or facilitation of petroleum products into Yemen where there is an Ansarallah involvement or port under Ansarallah control. Any Member considering the delivery of cargoes, including refined petroleum products to Yemen is strongly urged to undertake stringent due diligence as to the ownership of the intended port of discharge and the identity of the cargo receiver.
- Enhanced Due Diligence: Ensure comprehensive screening of counterparties, cargoes and trade routes to avoid direct or indirect links with sanctioned parties or restricted goods. Supply chains face heightened scrutiny, with vessels, insurers, and traders exposed to potential secondary sanctions or compliance violations. These risks make financing, shipping, and insurance particularly complex and may bring it within the scope of sanctions.
Vessel and Crew Safety in the Red Sea
- Recent Attacks: The Red Sea has witnessed an escalation in hostile activity, including missile and drone attacks and deliberate vessel targeting leading to vessel sinkings. The Joint Maritime Information Center (JMIC) has reported that a vessel (irrespective of flag or nationality) might be targeted not because of its own actions, but due to its corporate ties or sister vessels’ history. These incidents pose a direct risk to both vessels and crew safety, especially where there is no consistent logic in vessel targeting.
- Targeting Typologies: Vessels with links to Israel – including through flag, ownership, management, chartering, service provision, or even identifiable trading connections (i.e. historic port calls) – have been subject to heightened risk of attack. The targeting of vessels with links to Israel may come from more than one armed group i.e. the Yemeni Armed Forces and therefore is not limited to the Houthi group.
- Western- Affiliated Vessels: Vessels with identifiable Western ownership or affiliation such as US, UK or EU operators or service providers may also be viewed as potential targets.
- Practical Implications: A targeted approach may mean that even indirect connections to Israel (for example, a parent company, beneficial owner, or key service provider) could expose vessels to increased operational risk in the Red Sea.
Vessel operators are strongly recommended to:
- Conduct ongoing robust due diligence on counterparties and cargoes in order to identify and mitigate risks that could elevate targeting risk.
- Carefully review sanctions exposure where Ansarallah are concerned.
- Fully re-assess operational exposure for vessels transiting the Red Sea and implement enhanced and updated risk mitigation measures.
- Carefully assess voyage planning adjustments, transit timing and up to date local guidance (i.e. contact local correspondents) before navigating these waters. Contingency planning for crew safety and vessel protection is strongly advised when operating in a high risk/war area.
- Note that vessels with Western service connections or perceived affiliations to Israel have been disproportionately targeted. This includes ships with ownership, management, or service providers linked to Western companies or with identifiable trade routes involving Israel. However, the risk of false targeting still persists.
Recent incidents have involved vessels with either outdated or no direct ties to Israel, highlighting the challenges of determining potential affiliations. To assist operators, a layered approach is recommended for assessing possible connections, taking into account factors such as vessel ownership structures and historical port calls to Israel. Operators are encouraged to integrate this guidance into their broader risk assessments and to consider the use of maritime security services, alongside situational awareness tools, to inform navigation decisions in areas of heightened threat.
Furthermore, Members are encouraged to adopt best practice measures as illustrated within the BMP Maritime Security guidance that focuses on risk management processes and addressing global threats. The publication is intended to assist vessel operators to plan their voyage and to detect, avoid, deter, delay and report attacks and incidents wherever they may occur. Further guidance and advice on vessel and crew safety in the Red Sea and Gulf of Aden area can be found on the Club’s Loss Prevention webpage.
Members are reminded that under the Club’s Rules, cover is not available for any trade that breaches applicable sanctions. Even where there is no sanctions risk exposure, Members are reminded that the Club may experience practical challenges in terms of paying claims or facilitating transactions which will be subject to the banks own risk appetite. Finally, Members are advised that they should conduct thorough due diligence throughout the trade on the parties, cargoes, vessels, and other service providers that are or may be involved before they engage in any trade with a high sanctions risk.
**Disclaimer**
This document is provided for general guidance purposes only. It does not constitute, and should not be relied upon as, legal advice. The information contained herein is intended to highlight key considerations and recommended practices to assist vessel operators in mitigating sanctions-related risks. Owners and operators remain solely responsible for conducting their own due diligence and ensuring compliance with all applicable sanctions laws and regulations. Given the evolving nature of the sanctions landscape, operators are strongly encouraged to seek independent legal advice and to regularly review and update their compliance procedures accordingly.