Rocio Fabbro
British oil and gas giant BP will pause shipments through the Red Sea, joining the world’s largest container vessel companies in avoiding the region as attacks escalate — sending the price of oil up.
“In light of the deteriorating security situation for shipping in the Red Sea, BP has decided to temporarily pause all transits through the Red Sea,” the company said in an emailed statement, noting that the safety of its crew is its priority.
The company said it will keep the precautionary pause subject to the evolving circumstances in the region. Securing the Red Sea has become a top priority for companies and governments, as roughly 10% of global trade transits the strategic waterway, and through Egypt’s Suez Canal in the north and the Bab el-Mandeb Strait.
Ryan Petersen, founder and chief executive of Flexport, told The Messenger that even small changes, such as the rerouting of vessels, could have big supply chain and pricing effects.
"To put in perspective, 30% of global containerized freight moves through the Suez, and the average value of goods on each vessel is around $1 billion," Petersen said in an email. "With these bottlenecks, about 25% of global effective capacity could be removed from the market."
Brent crude, the global benchmark, climbed 2.8% to $78.62 a barrel, and Western Texas Intermediate rose 2.74% to $73.39 a barrel. Natural gas futures were up 2.85%.
While Christmas deliveries likely won't be impacted, importers are preparing for a busy first quarter as goods will be delayed, Petersen said.
The company said it will keep the precautionary pause subject to the evolving circumstances in the region.
In a meeting with his Emirati counterpart on Sunday, National Security Advisor Jake Sullivan discussed cooperation in countering threats from Yemen’s Houthis in the Red Sea. The Iranian-backed militant group has claimed responsibility for three attacks on Israel-linked vessels since Israel launched its war in Gaza following Hamas' Oct. 7 attacks.
Maersk, Hapag-Lloyd, CMA CGM and MSC Mediterranean Shipping Co., the world’s largest container line, on Friday temporarily halted transit through the Red Sea following attacks on vessels. On Monday, Hapag-Lloyd told The Messenger it will reroute several ships via a longer route around the Cape of Good Hope.
“This will be done until the passage through the Suez Canal and the Red Sea will be safe again for vessels and their crews,” the German shipping company said.
As of Sunday, 46 container ships, including all major container cargo firms with the exception of China Ocean Shipping Company and Orient Overseas Container Line, have been diverted around the Cape. Another 78 are delayed and awaiting further orders before transiting, Petersen said in a post on X. The diversion could add as much as two weeks to shipping times.
No comments:
Post a Comment