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Shipping giant Maersk will continue to reroute shipments via the Cape of Good Hope and away from the Red Sea, despite the deployment of an EU naval force to the region, according to a statement released on Friday. Attacks have ramped up despite the deployments and the “risk level in the region remains elevated,” the company said. Recent attacks which saw loss of life aboard the True Confidence and the sinking of the Rubymar also contributed to the carrier’s decision, it said.
Older cargo ships with untraceable ins. are choosing to brave the Red Sea route, increasing risks of environmental damage, Bloomberg reported on Thursday, citing its own analysis. Ships transiting the Red Sea and the Suez Canal are older and hold murkier ins. information compared with data from last year, research found.
Houthis have granted China and Russia guarantees of safe passage for their vessels transiting the Red Sea and Gulf of Aden, Bloomberg reported on Thursday, citing sources with knowledge of the matter. China and Russia are set to grant the Houthis support in bodies such as the UN Security Council in exchange, the sources said. The nature of this support is so far unclear, but it could include blocking resolutions targeting the Iranian-backed group, Bloomberg said.
The skirmishes continue: US forces shot down six Houthi unmanned aerial vehicles in the southern Red Sea on Saturday in response to the firing of four anti-ship ballistic missiles towards a Chinese-owned oil tanker, Reuters reports, citing a US Central Command (Centcom) statement. A fifth missile was also launched towards the vessel, but no injuries were reported, the newswire said. The preceding day had seen Centcom carry out “self-defense strikes” targeting Houthi underground weapon storage facilities, Reuters reported on Saturday, citing a separate Centcom statement.
Tankers trapped amid Red Sea crossfire pose spillage risk: Two tankers, dubbed FSO Safer and MT Yemen, carrying oil and toxic chemicals remain stuck in the Red Sea near Yemen’s port of Ras Issa, Reuters reported on Thursday. Despite urgent calls by the UN to empty the vessels and relocate them to avoid a toxic spill, differences between the Houthis and Yemen’s internationally recognized government on who should benefit from the proceeds from the oil sale remain. A USD 121 mn operation by the UN saw 1 mn barrels of oil transferred from the decaying hull of the FSO Safer to the MT Yemen last August.
MARKET WATCH-
A shortage in the global tanker fleet may arise if the Red Sea crisis drags on for another six months, Kuwait Petroleum Corporation (KPC) CEO Nawaf Al Sabah told CNBC last week at the sidelines of the CERAWeek conference in Houston. The company has diverted some shipments around the Cape of Good Hope and is continuing to use the Red Sea route, while leveraging its strategic fleet to ensure that timely deliveries continue. However, continued disruptions may see interruptions to supplies from other producers that do not have the same extra capacity, the executive explained.
Shippers are eyeing long term charters for tankers as longer journeys, rising risk premiums, and decreased capacity have caused rates to surge, Reuters reported last week, citing statements by shipping executives. Charters for Aframax vessels, which can haul some 800k barrels of crude, have ramped up to a daily rate of USD 49.5k up from USD 39k five months ago, the newswire said, citing shipping data. Detours have stretched some voyages by three weeks, hiking costs and tightening availability, while risk premiums for Red Sea transits and tankers going out of service due to sanctions for moving Russian crude have further tightened the market. These dynamics have led shippers to prefer long term leases, in order to lock-in rates and save on chartering.
Surging oil prices on the back of Red Sea disruptions are stoking inflation and weighing down economic growth in India, highlighting the need for the country to diversify its trade routes, Reuters reported, citing Friday statements by India’s government. Some 80% of India’s merchandise trade passes through the Red Sea, including essential products such as crude oil, auto parts, chemicals, and textiles, the newswire said. The aggregation of increased freight costs, higher ins. premiums, and longer transit times, can make imported goods “significantly more expensive,” the newswire cites India’s finance ministry as saying. India’s exports are also impacted by the disruptions, as higher costs make them less competitive. “To effectively address these challenges, there may be a need to diversify trade routes and transportation options,” India’s finance ministry said, adding that it retains a positive outlook for the country’s economy despite these setbacks.
