Following intensified attacks by Houthi rebels, oil supermajor BP is temporarily suspending all shipments via the Red Sea, becoming the latest major firm to pause vessel navigation in the area that could reverberate through global supply chains.
"In light of the deteriorating security situation for shipping in the Red Sea, BP has decided to temporarily pause all transits through the Red Sea," BP said on Monday in a statement carried by the BBC.
"We will keep this precautionary pause under ongoing review, subject to circumstances as they evolve in the region," the company noted.
BP thus becomes the latest major firm to have decided to temporarily halt shipments in the area that has become a prime target of attacks on vessels by the Iran-aligned Houthi rebels in Yemen.
The world's largest shipping lines have also announced the suspension of travel through the Red Sea amid the string of attacks by Yemen's Houthis and, most recently, Somali pirates. Maersk Tankers, Moller-Maersk, Hapag-Lloyd, and MSC all said their vessels would be avoiding the Suez Canal until the security situation improves. The most recent addition to this group was French CMA CGM.
On Monday, Evergreen said it would temporarily suspend Israel's import and export service due to rising risk and safety considerations with immediate effect until further notice. Evergreen has also instructed its container ships to suspend navigation through the Red Sea until further notice.
In addition, V. Group, one of the biggest providers of crew to the global shipping industry, said it has asked ship owners to consider alternatives to the Red Sea route.
"V.Group is advising all customers to consider all alternatives to minimise the risk to seafarers, vessels and cargo," a spokesperson for the company told Bloomberg. "The final decision on a ship's route rests with the customer."
If cargo ships and tankers continue to avoid the Red Sea/Suez Canal route, they may have to add thousands of miles to their travel via Africa, potentially creating supply chain issues.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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Comments
This could disrupt oil and gas shipments cruising through the Strait of Hormuz on their way to Europe via the Suez Canal.
It all depends, however, on what retaliation Israel may take against the Houthis to determine if the conflict could widen further and involve Iran and Hizbullah on the side of Hamas. Where this to happen, it is very possible that Iran would close the Strait of Hormuz thus
disrupting oil and gas shipments to the world from the Gulf region.
In such a situation, Brent crude price could rise to 150 dollars a barrel while the Strait is blocked.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert