BAKU, Azerbaijan, January 18. This week, Shell, the oil giant, officially stated that its tankers are steering clear of the Red Sea. Shell's CEO emphasized an anticipated short-term price impact of at least 5-10 percent.
The repercussions of Houthi rebel attacks have led to widespread shipping diversions, affecting 90 percent of container ship traffic destined for the Suez Canal. Major retailers such as Walmart are now forced to devise alternative cargo shipping plans. MSC, the world's largest shipping company, has notified clients of upcoming rate increases for specific container traffic to the U.S., commencing on February 12. Honour Lane, another shipping company, predicts that the Red Sea situation may persist for up to six months, possibly extending to a year.
The far-reaching consequences of the Red Sea diversions have spilled into the energy markets. Despite ongoing military actions against Houthi rebels by the U.S. and its allies, shipping experts warn that the crisis could endure for several months, potentially resulting in a shortage of cargo container supply.
Spencer Welch, Vice President, Head of Oil-Markets Midstream & Downstream Consulting at S&P Global Commodity Insights, told Trend that at the moment it is adding a small risk premium to oil prices, also some cargoes of oil are choosing to travel round southern Africa (between Europe and Middle East/Asia) rather than go through Suez Canal/Red Sea which adds a little transport cost to the oil.
He believes that any sharp increase in oil prices is unlikely, because of the amount of spare oil supply capacity in the world (OPEC+ supply restrictions), but it is not impossible.
“Unlikely OPEC would take any immediate action. Obviously both Russia and Saudi Arabia will be observing carefully, but the situation has little direct connection to the Saudi-Russia (OPEC+) alliance,” noted the expert.
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