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Oil and gas woes deepen amid Red Sea escalation: No fewer than five Qatari vessels carrying liquefied natural gas (LNG) making their way to the Bab El Mandeb strait have been stopped in their tracks since Friday, Bloomberg reported. Around 209 oil tankers — or 4% of the world’s oil fleet — have started rerouting away from the Red Sea over the weekend in the clearest example of disruption to the oil market since Israel’s war on Gaza began, according to Asharq Business, citing a note from Oil Brokerage
The bigger picture: While the Houthi group hasn’t purposely targeted any oil tankers since the onset of attacks in November, Qatar — the second largest exporter of LNG to Europe — likely views US and UK strikes in Yemen as the beginning of graver tensions in the Red Sea. The American and British navies jointly advised merchant vessels to avoid Red Sea transit following their attacks on Houthi positions.
This includes Qatar’s state-owned LNG carrier QatarEnergy, which is pausing Red Sea transits pending a security update, Reuters reported. “It is a pause to get security advice, if passing [through the] Red Sea remains unsafe we will go via the Cape … It is not a halt of production,” a senior source that the newswire says has direct knowledge of the matter said.
Market reax: Natural gas (Nymex) fell by 6.3% to USD 3.11 per MMBtu, while Brent crude inched down to 0.2% to USD 78.15 a barrel by the end of trading yesterday.
The shipping industry is still feeling the pressure: German shipping line Hapag-Lloyd decided to continue to reroute ships around the Cape of Good Hope for at least another week since it pulled its fleet from the fraught waterway in December, a statement from the shipping giant said. Shipowners group BIMCO also issued a statement yesterday highlighting the risks to shipping in the region that recommended “shipping companies to consider avoiding shipping operations in the area.”
But, the recent disruptions in Red Sea shipping have not triggered a shift to air freight for FedEx,Reuters reports. “Shipping over the ocean makes up 90% of global commerce, so even a small change would have an impact, but we haven’t seen much yet,” FedEx CEO Raj Subramaniam said.
DEVELOPMENTS ON THE GROUND-
The Houthis targeted a US commercial vessel with an anti-ship ballistic missile, US Central Command (Centcom) said yesterday on X. The missile struck a US operated and owned container vessel dubbed the Gibraltar Eagle, with the ship continuing its journey without reporting injuries to crew or serious damage, Centcom added.
