Israel’s only southern seaport, the Port of Eilat, is set to cease all commercial operations from July 20, 2025. This critical decision stems from a severe financial crisis exacerbated by the ongoing Red Sea conflict and Houthi attacks, leading to a collapse in revenue and mounting debts.
Financial Crisis and Debt Accumulation
The Port of Eilat’s operator has faced a protracted financial struggle, culminating in the Eilat Municipality seizing all its bank accounts. This drastic measure was taken after months of unpaid municipal taxes, estimated to be between NIS 600,000 and NIS 700,000 per month, totaling nearly 10 million shekels (approximately $3 million). Additionally, the operator has failed to pay over NIS 3 million ($892,000) in concession fees to the Israeli government since the onset of the war.
The port’s revenue plummeted by nearly 80% in 2024, falling from NIS 212 million ($63 million) in 2023 to just NIS 42 million ($12.5 million). In 2024, only 16 ships visited the port, with no car imports recorded, a stark contrast to 2023 when the port handled 134 ships and imported approximately 150,000 vehicles, nearly half of all cars entering Israel. The situation worsened in the first half of 2025, with a mere six ships calling at the port. This severe decline forced the company to lay off half its workforce by March 2024, and income from vehicle imports dropped by 100%.
Impact of Red Sea Conflict
The primary catalyst for this financial collapse is the escalating conflict in the Red Sea and the persistent attacks by Yemen’s Houthi forces. Since November 2023, Houthi missile and drone strikes have intensified, specifically targeting ships linked to Israel or those heading to Israeli ports. These attacks have effectively deterred international shipping companies, forcing them to reroute vessels away from the Red Sea, significantly impacting Eilat’s commercial viability.
The Houthis recently claimed responsibility for a dual drone strike targeting Eilat port and a military site in the Negev region, asserting it as a successful operation. While Israel has not officially responded, these claims underscore the direct threat posed by the Houthis to the port.
Strategic Importance and Broader Repercussions
Developed by the Israeli government in the 1950s, the Port of Eilat, located south of the Suez Canal, has historically been a smaller yet strategically vital facility. It serves as Israel’s sole gateway to the Red Sea, enabling direct maritime links with Asia, East Africa, and Australia without transiting the Suez Canal. The port traditionally handled significant exports of potash, fertilizers, and minerals from ICL’s Dead Sea Works and was part of the crude oil transport route via the Eilat-Ashkelon pipeline (EAPC).
The impending closure carries significant economic and security implications:
- Economic Disruption: The closure will severely affect the Europe Asia Pipeline Company and ICL’s Dead Sea Works, which rely on Eilat for potash exports. Goods typically routed through Eilat will need alternative pathways, likely increasing costs and creating logistical bottlenecks at Israel’s Mediterranean ports like Haifa and Ashdod, which are already facing increased congestion.
- National Security Concerns: The National Emergency Authority warned that if the shutdown continues, port equipment such as cranes and electrical systems could deteriorate, causing long-term damage. More critically, all tugboats and other vessels will be stopped, and the port will no longer be able to support the Israeli Navy, which has been using the facility since the war began to launch and support operations against the Houthis. The closure, as sources at the port reportedly stated, “will symbolize a victory for the Houthis and a loss for the Israeli economy.”
- Employment: The economic impact extends to employment, with many workers already laid off and further job losses expected in the Eilat region.
The Israeli government had considered offering compensation of up to NIS 15 million (around $4.5 million) to the operator, but this was made conditional on the payment of the overdue concession fees.
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Source: Marine Insight
