Abstract
Renewed hostilities between Ethiopia and Eritrea have the potential to threaten Red Sea shipping, even in the absence of direct attacks on merchant vessels. Should the conflict extend toward Eritrea’s port of Assab, military activity near this critical maritime corridor could increase war-risk costs and exacerbate the existing Houthi threat to the Bab el-Mandeb Strait. The United States should use its leverage with both governments to keep Ethiopian forces away from Assab, secure an Eritrean withdrawal from Tigray, and establish mechanisms to prevent clashes from spreading toward the coast.
Introduction
The next threat to Red Sea shipping may come from a conflict that has drawn minimal attention in Washington. Eritrea and Ethiopia are on the verge of their first war in over 25 years after Eritrean troops allegedly crossed into Ethiopia’s northern Tigray region, along the Eritrean border, and clashed with Ethiopian forces. Iran and the Houthis, the Iran-backed Yemeni militant group, have shown how quickly the threat of war near a chokepoint drives shipping away; if Ethiopia-Eritrea fighting spreads toward the Red Sea port of Assab, it could do the same without either side targeting merchant vessels. The United States should use its ties with both capitals to secure an Eritrean withdrawal from Tigray and prevent Ethiopian forces from advancing on Assab.
A Potential Second Shock to the Red Sea
The timing could hardly be worse for global commerce. With Iran choking the Strait of Hormuz, Saudi Arabia is rerouting about 4 million barrels of oil daily for export via the Red Sea, most of it bound for Asia. Those tankers must sail past 600 miles of Eritrean coast and Houthi-held islands before exiting through the Bab el-Mandeb Strait, the narrow waterway between Yemen and Djibouti. Weekly vessel transits through the Bab el-Mandeb have fallen from about 38 to 25 since the Houthis renewed attacks in July, leaving the route little margin to absorb a second shock. War along Eritrea’s coastline would threaten one of the few Hormuz bypass routes.
That threat would strike at freedom of navigation, which the United States has defended since the 19th century and which the latest National Security Strategy ranks among the country’s “core, vital national interests.” That interest can be lost without a waterway ever closing. Houthi threats alone have pushed carriers to reroute around Africa, raising freight and energy prices for Americans and partners alike. A second danger zone on the opposite shore would deepen a challenge the United States has yet to resolve and raise the cost of meeting it.
How a Coastal War Could Drive Shipping Away
Nearly three years of Houthi attacks have shown that insurers’ appetite for risk shrinks when ships are hit and even when they are merely threatened. An Ethiopia-Eritrea war would test a third trigger, fighting that simply comes near the shipping lane. Neither side would likely fire on merchant ships. Ethiopian Prime Minister Abiy Ahmed wants seaport access for Ethiopia’s own use, with his sights likely set on Assab, Eritrea’s southern port that was part of Ethiopia until Eritrean independence in 1993. For Eritrea, its ports depend on the same waters to sustain the nation’s growing imports and exports.
Ethiopia’s desire for the port has not stopped Addis Ababa from striking it before, as in February 1999, when Ethiopian aircraft hit Assab, causing Red Sea transport costs and the price of shipping Middle Eastern oil to climb. Today, Eritrea’s alleged incursion gives Abiy a pretext to push toward the port again, and Assab sits less than 40 miles from Yemen, so ships bound for the Bab el-Mandeb would pass within range of stray missiles, drones, and falling debris. That proximity alone could be enough to change insurers’ risk calculation.
An Ethiopia-Eritrea war would therefore add a shipping cost independent of the Houthi threat, and one companies would find harder to avoid. Houthi risk depends partly on who owns a vessel, because the group picks its targets: underwriters have recently quoted some Saudi-linked ships, its current target, around 3 percent of hull value, while unaffiliated vessels pay a fraction of that. A coastal war would offer no such sorting: Eritrea’s arsenal consists predominantly of outdated Soviet-era systems, and in the last Tigray war, Ethiopia shelled towns in ways international organizations called indiscriminate. Fighting with older weapons systems and a record of imprecise strikes would raise the risk of collateral damage to nearby vessels, regardless of ownership. The 1998–2000 war showed how durable that risk can be: two years after the fighting ended, Eritrea-bound cargo still carried a war-risk premium.
That war would also stack its risk on top of the Houthis’. The London market’s Joint War Committee already places the waters off southern Eritrea in its Red Sea high-risk zone because of Houthi attacks, and a second, independent danger would keep rates high even if the group ceased or decreased its strikes on shipping.
Washington Can Keep the War Away from Assab
The United States has leverage with both capitals to pull Eritrean troops back from Tigray and keep Ethiopian forces away from Assab. The State Department’s October 3, 2026, warning that war would put American cooperation at risk needs weight behind it. The United States should tie its new outreach to Eritrea, which follows the lapse of sanctions from the last Tigray war to Eritrea withdrawing its forces. It should tell Ethiopia that using force over Assab would cost it American security cooperation, including the new defense agreement the two signed in August.
Skeptics might argue that Washington’s leverage in the region is thin and the stakes too remote to use it. For now, the fighting remains in Tigray, far from the coast. Eritrea weathered years of frosty relations with the United States, including sanctions from November 2021 until September 2026, so losing a new opening may not deter Eritrea from withdrawing troops in Tigray. Ethiopia replaced Western support in 2021 with drones from the United Arab Emirates (UAE), Turkey, and Iran, which blunts the threat of withholding American military equipment. Yet with shipping through the Strait of Hormuz still constrained and Houthi attacks thinning Red Sea traffic, even a modest new risk would fall on one of the few export routes left, and preventing a war around Assab costs far less than managing one. Raising the cost of escalation requires only modest leverage, and Washington has it. Eritrea, eager to open its coastal ports to Western shipping, has sought closer ties with Washington since the sanctions lapsed. Ethiopia, for its part, would likely need backing from the UAE to move on Assab, and the UAE is a close US partner Washington can press to prevent Abu Dhabi from providing that support.
With clashes already underway in Tigray, the 2000 Algiers peace agreement ending the 1998–2000 war offers a model for keeping the two armies apart. It separated them behind a United Nations-monitored security zone and set up a military commission to handle breaches. A comparable arrangement along the Eritrea-Afar frontier, with outside monitors and a hotline between the two militaries, would make fighting near Assab less likely.
A war between Ethiopia and Eritrea could price ships out of the Red Sea without either side firing on one. Preventing clashes from widening into a coastal war is the cheapest way for the United States to protect freedom of navigation before another Red Sea front opens.
