The route via the Suez Canal to the Mediterranean is of great importance for the transport of crude oil. The latest attacks by the Houthi rebels are cause for concern, even if oil prices initially show little movement.
Oil prices initially moved little in early trading. In the morning, a barrel (159 liters) of North Sea Brent for delivery in February cost $78.06. That was eleven cents more than the day before. The price for a barrel of the American variety West Texas Intermediate (WTI) for January delivery fell by ten cents to $72.37.
At the beginning of the week, oil prices had increased by around two dollars. The trigger was a worsening of the tense situation in the Red Sea. Several major shipping companies suspended passage to the Suez Canal after attacks by Iran-backed Houthi rebels on merchant ships increased. The USA has now set up an international alliance to protect the ships.
Taiwanese shipping company Evergreen stops freight traffic with Israel
Because of the ongoing attacks by the Houthi rebels, the Taiwanese shipping company Evergreen stopped freight traffic with Israel. “For the safety of ships and crew, Evergreen Line has decided to temporarily stop accepting Israeli cargo with immediate effect,” the company said in a statement on Monday. The shipping company’s container ships have also been ordered to suspend voyages through the Red Sea until further notice.
The Danish shipping company Maersk is also sticking to its cautious course. “We are pleased that governments around the world have responded promptly with joint efforts on international maritime security and capacity building in the area to bring about a solution that will ensure an early return to transit through the Red Sea, the Gulf of Aden and the Suez Canal,” said a statement in Copenhagen.
However, it also says: “At this point in time, however, it is difficult to determine the exact time.” Therefore, the decision to reroute ships via the Cape of Good Hope “will ultimately lead to faster and more predictable outcomes for our customers and their supply chains.” Maersk is the second largest container shipping company in the world in terms of transport capacity and operates 12 services in the shipping area, meaning it sails an average of 24 passages through the Suez Canal every week.
The route via the Suez Canal to the Mediterranean is of great importance, among other things, for the transport of crude oil. Analysts at investment bank Jefferies estimate that around eight percent of global crude oil shipments go through the Suez Canal. A loss of the route is expensive and time-consuming, as the ships then have to take the much longer route around Africa.
Source: Stern
