The World Bank sounded the alarm this week over disruptions to global shipping routes and supply chains stemming from attacks on vessels by Yemen’s Houthi rebels. The organization warned the turmoil could negatively impact inflation and prolong economic headwinds.

Yahoo Finance's Rick Newman explains why it may be a reason the Biden administration took action on Thursday.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith.

Video Transcript

JOSH LIPTON: Just before the US strikes in the Red Sea, the World Bank issued a warning that the Houthi attacks were having an impact on shipping routes and supply chains, likely leading to inflationary bottlenecks. This, of course, does not come as good news. The White House, if voters start to see prices rise at the pumps and elsewhere, making last night's strikes as much of a military fight as it is one with inflation overall. That's the take from Yahoo Finance's very own Rick Newman. Rick.

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RICK NEWMAN: Hi, guys. Yeah, I'm not saying that Biden ordered these strikes solely to keep inflation under control, but it's certainly a component of what he has to be thinking about. I mean, we all know the Biden administration has been shell shocked by inflation that came out of nowhere in 2022 and 2023. And Biden's approval ratings sank in direct correlation to rising inflation. The problem is inflation has improved by quite a lot, but Biden's approval rating has not gone back up.

So they are attuned to anything that can be inflationary and these Houthi attacks on the commercial ships in the Red Sea is definitely inflationary. As Ines pointed out, ships that have to go-- that are deciding to take a detour around Africa, around the bottom of Africa, that adds a lot of time and a lot of cost. Biden said yesterday that something like 2,000 ships have already diverted away from that shortcut through the Red Sea and the Suez Canal, so that's just adding a lot of cost.

We've seen shipping rates going up not across-- not everywhere. But for ships going through the Red Sea and the Suez Canal, shipping rates have skyrocketed. So that is going to get passed on to consumers.

So the big question for markets now is what happens next? Will these strikes against the Houthis, will these-- did they get all the areas where they've been launching missiles? Did they get the weapons they've been launching? Did they impair their ability to fire more of these weapons at commercial ships?

Or the Houthis are just going to come back and do it again and then are we going to have ongoing tit for tat between the US and UK forces that are attacking these Houthi sites? And the Houthis and, of course, the big concern is does this escalate further into something that involves Iran directly? I think it's encouraging that oil prices only went up by 1% in the 24 hours or so since we got this news. So traders are basically saying, we think this is contained for now. But there are a lot of directions this could go and it's day by day.

JOSH LIPTON: All right. Rick, we got to leave it there, but thank you for that.