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Crude oil transportation: concerns about the situation in the Red Sea

The route via the Suez Canal to the Mediterranean is of great importance for the transportation of crude oil. The latest attacks by the Houthi rebels are a cause for concern, even if oil prices are not moving much for the time being.

,   and  Michael Bootcampf
3 min read
Analysts at investment bank Jefferies estimate that around eight percent of the world's crude oil....aussiedlerbote.de
Analysts at investment bank Jefferies estimate that around eight percent of the world's crude oil shipments pass through the Suez Canal. Photo.aussiedlerbote.de

Middle East - Crude oil transportation: concerns about the situation in the Red Sea

Oil prices were initially little changed in early trading. In the morning, a barrel (159 liters) of Brent crude for February delivery cost 78.06 US dollars. This was eleven cents more than the previous day. In contrast, the price of a barrel of West Texas Intermediate (WTI) for January delivery fell by ten cents to 72.37 dollars.

At the beginning of the week, oil prices had risen by around two dollars. This was triggered by an escalation of the tense situation in the Red Sea. Several major shipping companies suspended transit to the Suez Canal after an increase in attacks on merchant ships by the Iranian-backed Houthi rebels. The USA has now formed an international alliance to protect the ships.

Taiwanese shipping company Evergreen stops freight traffic with Israel

Due to the ongoing attacks by the Houthi rebels, the Taiwanese shipping company Evergreen has 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 instructed to suspend sailing through the Red Sea until further notice.

The route via the Suez Canal to the Mediterranean is of great importance for the transportation of crude oil. Analysts at investment bank Jefferies estimate that around eight percent of the world's crude oil shipments pass through the Suez Canal. A breakdown of the route is expensive and time-consuming, as the ships would then have to take the much longer route around Africa.

Read also:

  1. The escalating tensions in the Red Sea have led to concerns about the impact on oil prices, particularly as a significant portion of global crude oil shipments pass through the Suez Canal.
  2. The Houthi rebels, backed by Iran, have increased their attacks on merchant ships in the Red Sea, causing disruption to international maritime traffic and potentially affecting crude oil transportation from the Middle East to markets such as Europe and Asia.
  3. The suspension of transit through the Suez Canal by major shipping companies has increased the cost and time required for crude oil shipments from the Red Sea to the Mediterranean, highlighting the importance of maintaining secure shipping routes for oil transportation.
  4. The US dollar-denominated price of Brent crude oil for February delivery remained relatively stable at the beginning of the week, despite the ongoing tensions in the Red Sea, indicating a degree of resilience in the global oil market.
  5. Israeli cargo shipments have been impacted by the Houthi rebel attacks on merchant ships in the Red Sea, with the Taiwanese shipping company Evergreen temporarily stopping its freight traffic with Israel for safety reasons.
  6. The volatile situation in the Middle East and its impact on crude oil transportation through the Suez Canal has the potential to influence raw material prices, including the north sea variety of oil, which is an important component of many industries in countries like Singapore.
  7. The Suez Canal incident is not the first time international shipping has been disrupted due to geopolitical tensions. In 2021, for instance, the world witnessed a six-day shutdown of the Suez Canal after a massive container ship became stuck.
  8. The impact of the ongoing tensions in the Red Sea and potential disruption to crude oil transportation via the Suez Canal could put pressure on oil prices, as alternative shipping routes through the Red Sea and around the Cape of Good Hope are more expensive and time-consuming.
  9. The international community, including the US, is taking steps to protect ships and ensure security in the Red Sea, recognizing the strategic importance of maintaining secure shipping lanes for crude oil transportation and global energy security.

Source: www.stern.de

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