Recently, Yemen-based Houthi militants attacked commercial shipping vessels traveling through the Suez Canal and the Red Sea, in response to the ongoing war between Israel and Hamas. Over 10% of world trade happens through that region, including oil shipments (CL=F, BZ=F).

Breakwave Advisors Managing Partner John Kartsonas joins Yahoo Finance to talk about what could happen to trade and foreign policy as a result of continued conflict in the region.

"A lot of Russian oil comes down from the Suez Canal all the way to Asia and India. The expectation is that these ships won't be affected by that and the other way around," Kartsonas explains. "I think it depends a lot on what the purpose is and which country's ships they're targeting. So far it has been, I would say, isolated. Even if in the headlines it's a big deal, I don't think that so far it's caused any significant disruption..."

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

Video Transcript

BRAD SMITH: What is your anticipation for whether or not this actually boils over into some type of foreign policy or international type of conflict? The US has already initiated Operation Prosperity Guardian as it's called to address the matter in the region.

JOHN KARTSONAS: Well, again, you talk about-- you know, global shipping here is nobody's territory, and it's international waters, so you have a bunch of countries that are going to get involved here to protect global shipping. And again, you talk about goods that are being shipped from China, you talk about oil that's been shipped from the Middle East to Europe, you know, maybe refined products the other way around, so there are a lot of different countries and a lot of different interests involved here.

Ultimately, I think that once, you know, specific countries still safe sailing through the straits, maybe the situations ease a a little bit. A lot of Russian oil comes down from the Suez Canal all the way to Asia and India, and, you know, the expectation is that these ships won't be affected by that, and the other way around.

So I think it depends a lot on what the purpose is and what you know, which country's ships they're targeting. But so far, I mean, it has been I would say isolated. Even if in the headlines it's a big deal, I don't think that so far it has caused any significant disruption so far.

SEANA SMITH: John, what would make you a little bit more worried just about the fact that we could see this escalate, that we could see what is, up until this point, as you said, limited disruption, start to widen a bit?

JOHN KARTSONAS: So any incident that actually causes a significant damage to ships, talking about maybe a sinking of a ship or actually human life lost, then you're going to have a much more powerful reaction from the shipping companies. Still, you know, we heard a lot of companies that are avoiding the straits and avoiding the Suez Canal, but there's still a significant amount of ships that will continue to sail through the area. But the minute you have something like that, first of all, the insurance are going to get really alerted to that, and they probably are going to require the ships to divert away. And second, obviously, when you talk about human's life lost, then things are getting more serious.