Shadow of chaos in the red sea it gets darker and darker oil market: On Friday, January 12, several of the world’s major oil companies blocked or diverted traffic to this strategic strip of sea following attacks by US and British aircraft on Iran-allied Houthi militants in Yemen.
The target of the Yemeni rebels merchant ships since the end of last year in attacks aimed at demonstrating support for the Palestinians against the Israeli offensive in the Gaza Strip. These incidents were concentrated in Bab al-Mandab Straitsouthwest of the Arabian Peninsula.
In another sign of escalation, Iran seized a Iraqi oil tanker intended for Turkey. The accident happened closer Strait of Hormuzbetween Oman and Iran, another important maritime corridor.
THE oil prices rose about 2% yesterday, after another jump early in the session, with Brent crude trading above $80.
Is the oil market at risk of chaos? What is happening in the Red Sea
The oil market is currently in turmoil.
The tankers Toya, Diyyinah-I, Stolt Zulu and Navig8 Pride LHJ were all seen turning on their way to avoid the Red Sea on Friday, according to vessel monitoring by LSEG and Kpler (as reported by Reuters).
Five other tankers – Madarah Silver, Hafnia Thames, Free Spirit, Front Fusion and Gamsunoro – diverted or suspended navigation on Friday. On the same day, Danish oil group Torm said it had decided to suspend all transits through the southern Red Sea.
Shipping companies Hafnia and Stena Bulk also said they would avoid Bab al-Mandab.
Major container shipping companies Maersk and Hapag Lloyd welcomed the measures to protect the region. But they did not say whether the attacks by the United States and Britain would be enough to force them to return to the Suez Canal, the fastest route between Asia and Europe, which accounts for about 12% of global container traffic.
Last month, Belgian oil company Euronav said it would avoid the Red Sea until further notice. A company spokesperson only reiterated that the policy had not changed.
In recent weeks, a number of shipping companies have decided to avoid the Red Sea region due to increased risks.
Despite some deviations tankersSince the Houthis stepped up their naval attacks in December, supply chain disruptions have been mainly limited to the container shipping sector. The operation of oil tankers across the Red Sea remained stable last month. But anything can still happen.
The Red Sea and oil: what’s at stake
A multinational coalition advised ships to avoid the passage Strait of Bab el-Mandeb for “several days,” according to a statement from the International Association of Independent Tanker Owners.
The strait in question connects the Gulf of Aden with the Red Sea. They sail through the Red Sea about every day, according to business analytics firm Kpler 7 million barrels of oil and other products.
American and British attacks on Yemen “They could mark a turning point because, at least for a few days, the Bab al-Mandab strait will become a war zone”said Alberto Ayuso Martin, head of research at Medco.
The Strait of Hormuz is also in the sights. According to Kpler, approximately 18 million barrels of oil and products pass through this passage daily.
Robert McNally, president of Rapidan Energy, said the flashpoint is Lebanon, where Israel has threatened to push Iran’s ally Hezbollah out of the border region. Hezbollah is Iran’s strategic right-hand man, McNally said, and Tehran should respond.
“His leverage point is oil, especially the price of gasoline in election season”McNally said of Iran. The risk is that Tehran will respond to a serious Israeli attack against Hezbollah attacking oil ships in the Strait of Hormuz or by targeting oil infrastructure in the Arabian Gulf, McNally said.
The Iranian Navy seized an oil tanker in the Gulf of Oman on Thursday. Goldman Sachs said oil prices could double if there was a prolonged disruption of the Strait of Hormuz, although the investment bank believes that scenario is unlikely.