Red Sea Disruptions set to Continue Throughout 2024 | OilPrice.com - OilPrice.com
Red Sea Disruptions set to Continue Throughout 2024 | OilPrice.com
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Shipping giant Maersk is warning that container shipping through the Red Sea could continue to cause disruptions into the second half of the year, with the company expecting shipping delays as vessels take the long way around the Cape of Good Hope instead of through the dangerous waters of the Red Sea.
“Be prepared for the Red Sea situation to last into the second half of the year and build longer transit times into your supply chain planning, Maersk’s head of North America, Charles van der Steene, said in a Tuesday statement carried by Reuters.
Maersk has had to add capacity to compensate for the extra transit time of many of its vessels—and it has warned some of the retail giants that it will be passing these extra costs to them.
Crude oil prices have been supported by shipping disruptions and extra transit time for oil cargo. It has also changed the course of oil flows, with Europe clamoring for oil from sources closer to it, triggering a price increase for Nigerian crude. “While global crude balances are getting longer (seasonally) in February and March, increased levels of Red Sea shipping diversions are keeping the market tight – as more oil is put on ships, leaving less available on land,” analysts at consultancy FGE wrote in a note on Friday.
As much as 1.6 million barrels of crude oil per day are now being forced to take the long way around in order to avoid the Red Sea. Since November, Yemen's Houthi rebels have repeatedly attacked cargo ships passing through the strait of Bab al-Mandab that splits north-east Africa from Yemen on the Arabian Peninsula. The Iran-backed rebels have been targeting vessels with connections to Israel and Western countries. And if Maersk’s prediction is correct, the situation will continue to have an impact on the oil markets into the next half of the year.
By Julianne Geiger for Oilprice.com
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