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Cape of Good Hope Becomes New Route for LNG Carriers

  • LNG shipping firms, including Flex LNG, are rerouting carriers away from the Red Sea due to threats from Houthi rebel attacks, with alternatives like the Cape of Good Hope being used.
  • Despite these disruptions, the LNG market remains stable with prices returning to normal levels after a recent spike, showing the flexibility of current market dynamics.
  • The broader perspective reveals a shift in global energy transportation, predicting that LNG will become more trafficked than oil in the next five years.

There are currently no tankers carrying liquefied natural gas (LNG) left in the Red Sea as shipping firms avoid the region in fear of Houthi rebel attacks.

According to an X post this morning by Oeystein Kalleklev, chief executive of LNG shipping firm Flex LNG, carriers are now being re-routed through Cape of Good Hope or deviated to other destinations.

The below picture was captured by shipping investor Ed Finley-Richardson on Twitter using shipping tracking platform Sea by Clarksons.

Other LNG carriers are represented in green.

This comes after the UK and US led a coalition of forces launching attacks on Yemen’s Houthi positions, in response to an escalation. The Houthi movement claims it is targeting ships linked to Israel, because of its military action in Gaza.

Commodities analyst for Reuters, Clyde Russell, noted yesterday that the volume of LNG affected is relatively small, and “current market dynamics are flexible enough to compensate without putting significant upward pressure on spot prices.”

LNG prices were down 2.2 per cent this morning as they return to stability following a month-long spike – 17 per cent above current levels – due to weather-induced high demand.

Prior to the escalation of Houthi attacks in the areas, insights firm GlobalData last year found that LNG is set to become a higher-trafficked fossil fuel than oil within the next five years.

By City AM

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