Oil Tanker Movements In The Red Sea Continue Despite Houthi Attacks

Oil and fuel tanker traffic in the waters of the Red Sea was pretty stable in December, despite several container vessels having rerouted owing to attacks by Iran’s Houthi militants, a Reuters analysis of ship tracking data reflected.

The attacks have resulted in a substantial increase in shipping expenses and insurance premiums; nevertheless, the impact on oil flows has been less than anticipated as shippers continue to use the vital East-West waterway. The Houthis have started striking shipments of non-petroleum products despite their claims that they are primarily targeting vessels headed for Israel.

The added costs have not significantly impacted most shippers so far since the Red Sea stays way more affordable than sending the cargo via Africa. But the situation bears watching with some oil firms such as Equinor and BP diverting the cargoes to the more extended channel. Also, enhanced shipping costs are more likely to boost exports of the US crude to some European buyers, specialists reported. Michelle Wiese Bockmann, a shipping analyst with Lloyd’s List, stated that there haven’t been interruptions to tanker traffic that all expected.

December experienced an average of 76 oil and fuel vessels daily in the south Red Sea as well as the Gulf of Aden, the core attack-prone area that is close to Yemen. Based on data from MariTrace, that was just three below average for the initial 11 months of 2023 and only two less than the average for November.

A rival tracking service named Kpler reportedly tracked 236 vessels on average every day across the Gulf of Aden and the Red Sea in December, a little above the 230 daily average recorded in November 2023. She stated that the additional cost of sailing around the Cape of Good Hope via Africa instead of the Red Sea would make voyages to deliver oil relatively less profitable.

Since the start of December 2023, chartering rates have doubled per data received from ship analytics major Marhelm. It costs almost $85,000 daily to transfer oil on Suezmax tankers that can carry nearly one million barrels. Aframax vessels that can move practically 750,000 barrels cost a whopping $75,000 daily. Tanker traffic recorded in the south Red Sea zone briefly dipped between 18 December and 22 December when the Houthi group intensified the attacks on the vessels, averaging about 66 tankers. Still, the movements resumed after, per MariTrace.

Container vessel traffic in the zone has fallen even more sharply, down by 28% in December compared to November, with a steep decline in the second part of the month as the attacks have mounted, per MariTrace. Multiple refiners, oil majors, and trading houses have continued using the Red Sea channel, according to an analysis of the LSEG data.

Shippers, as well as their customers, want to prevent a schedule disruption. So they are taking the risk, explained Calvin Froedge, the founder of Marhelm. He noted that several oil tankers sailing the Red Sea were carrying Russia’s crude to India, which the Houthis have zero interest in attacking.

The Chevron-chartered vessel Delta Poseidon sailed in the Suez Canal and the Red Sea toward the end of December while on its way to Singapore, per LSEG’s tracker. The Sanmar Sarod, which Reliance charters, also sailed the Red Sea in late December 2023 to deliver gasoline component supplies to the US, data reflected. Chevron will continue to assess the safety and security of routes in the Red Sea and all through the Middle East and make informed decisions based on the most recent developments, per a spokesperson.

In recent weeks, several tankers chartered by Aramco Trading Company of Saudi Arabia, Indian refiner Bharat Petroleum, and trading house Gunvor’s Clearlake division have travelled the route. The companies either failed to respond to requests for comments or declined to comment. However, some firms like Equinor and BP have paused transits via the Red Sea and rerouted vessels in the region.

Since the second half of December 2023, at least 32 tankers have successfully transited via the Cape of Good Hope rather than using the Suez Canal, per tracking service firm Vortexa. As reported by Vortexa, the majority of the tankers that have been diverting are either those run by US or Israel-based organizations or those that are chartered by businesses that declared a halt to Red Sea shipping.

While the East of Suez remains well supplied, fuel oil dealers and bunkering suppliers in Asia mentioned that they were observing developments in the Red Sea and that the present diversions are improbable to drive up prices. Based on Kepler data, east-to-west interruptions have mainly impacted European jet fuel and diesel imports thus far. Based on Kpler statistics, however, certain European fuel oil and gasoline supplies to the Middle East, Asia-Pacific, and East Africa have been impacted by west to east diversions.

Reference: USNews

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