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Qatar resumed its LNG shipments through the Bab El Mandeb Strait, with four tankers resuming their course after halting for several days due to Red Sea attacks, Reuters reports, citing ship tracking data. LNG tanker Al Rekayyat has resumed its journey through the Red Sea to Qatar, while LNG tankers Al Ghariya, Al Huwaila and Al Nuaman — carrying Qatari LNG cargoes — also made a move, but changed their course to head south despite signaling the Suez Canal as their destination, the newswire writes.
European supplies delayed? Qatar supplies Europe with 14.8 mn metric tons of natural gas a year, the newswire writes, citing estimates by S&P. The Red Sea and Suez Canal are the fastest route between Qatari ports to Europe.
MARKET REAX–Prolonged closures of the Red Sea to LNG tanker traffic are unlikely to affect natural gas prices due to counteracting market forces, Reuters reports. Although Qatari shipments to Europe would take longer if rerouted via the southern tip of Africa, the shipments would continue. Moreover, any shortfalls in supplies would be made up by the US which overtook Qatar as the world’s largest LNG exporter in 2023 and is increasingly focused on Europe, the newswire said.
“Knock-on effects” from Red Sea disruptions may persist well into 2Q 2024,a report by ING Think said last week. The number of vessels transiting the Red Sea in the first week of January has almost halved y-o-y, with container rates on the heavily impacted Asia-Europe route more than tripling and global averages doubling, the report said. A return to normalcy would depend on how long the disruptions last, but rebalancing will take time under any case. There is underlying overcapacity in maritime shipping however, and an end to disruptions will result in a gradual decline in freight rates.
Oil prices in Europe are a different story:European oil prices have surged amid concerns over supply disruptions, shutdowns in Libya, and weather-related delays for Black Sea supplies, Bloomberg reports. European refiners are concerned that tensions in the Red Sea will delay supplies from KSA and Iraq as tankers opt to reroute away from the region, incurring higher cargo costs and spreading tanker fleets thin. Forties was priced at a USD 1.45 premium to benchmark Dated Brent, compared to USD 0.20 discount just 10 days previous, while Azeri Light increased USD 1 to a USD 6.50 premium in less than a week, the outlet wrote citing Platts data.
And ins. premiums for shipping saw another hike: War risk ins. premiums for vessels transiting the Red Sea have surged on the back of attacks with the expectation that rates will continue to rise, Reuters reported citing ins. industry sources. The Red Sea was classed as a high risk area even before the Houthi campaign against shipping, with requirements for ships sailing the route to notify ins. and pay premiums. Premiums have risen to about 1% of vessel values, up for 0.7% last week, industry sources said.
AN EXPANSION OF TARGETS-
Yemen’s Houthis expand their target list: The Houthi movement has vowed to expand its targets in the Red Sea to also include US ships, Reuters reports, citing official statements. The group had previously said it would only target Israeli or Israel-bound vessels, but recent US and UK strikes against the militia have made American and British vessels “legitimate targets,” Houthi spokesperson Nasruldeen Amer told Al Jazeera.
The attacks keep coming: A Malta-flagged bulk carrier was hit by a missile some 76 nautical miles northwest of Yemen’s Saleef port suffering material damages but no injuries to crewmen, Reuters reports, citing a security firm and two Greek shipping ministry sources. The Greek-owned vessel, dubbed Zografia, was traveling from Vietnam to Israel with 24 crewmen aboard but no cargo. It was observed changing course to port following the attack, the newswire said.
And more rerouting is taking place: Japanese shipping operator Nippon Yunsen suspended transit through the Red Sea corridor, Reuters reports. The shipping line instructed its vessels navigating near the Red Sea to await in safe waters as it considers rerouting options, the newswire writes, citing comments by a company spokesperson.
DP World says delays will be temporary:Cargo delays affecting European companies due to Red Sea disruption are expected to be temporary as carriers and clients adjust logistics strategies to account for longer routes, DP World Group COO Tiemen Meester told Bloomberg. “There is a temporary dent into this flow, but it will catch up,” Meester said. Just-in-time retailers will have to account for 10 to 12 days of added inventory to keep on top of things, “Once they have that, the flow will continue,” Meester explained.
Consumer costs are another matter: The disruption will have a strong inflationary effect in Europe, DP World CFO Yuvraj Narayan told Reuters. “The cost of goods into Europe from Asia will be significantly higher,” Narayan said.
IN OTHER DISRUPTION NEWS-
Iran’s Revolutionary Guards carried out ballistic missile attacks on Israel’s “spy headquarters” in Iraq’s Kurdistan region on Monday night, amid fears of further spillovers from the Hamas-Israel war, Reuters reported. The attack targeted a “main Mossad espionage headquarters” the Guards said in a statement cited by the newswire. The attacks resulted in at least four deaths and six injuries and air traffic at Erbil’s airport was halted, Kurdish government and security sources said.
US seizes weapons bound for Houthis:The US Central Command (Centcom) seized Iranian weapons bound for the Houthis last week in a night-time seizure of a dhow off the Somali coast, Centcom said yesterday on X. Seized weapons included propulsion, guidance, warheads for medium range ballistic missiles, anti-ship cruise missiles, and other systems. The weapons were intended for use by the Houthis against international shipping, with the seizure being the first of its kind since Houthi attacks against shipping began in November 2023, Centcom said.
