BP announced on Monday a temporary pause in all shipments through the Red Sea due to the heightened risk of attacks on vessels by Houthi militants in Yemen. The company stated that it will continue to monitor the situation and make decisions based on the evolving circumstances in the region.
Oil prices experienced a significant increase with Brent crude, the global benchmark, rising by 1.1% to $77 a barrel, while US oil saw a 1% increase to $72 a barrel. The news had a ripple effect on the energy market, leading to a 5.5% jump in futures prices for Europe's benchmark natural gas contract, reaching â¬35 ($38.20) per megawatt hour by early afternoon on Monday. Though still below the all-time high of â¬320 ($349.24) per megawatt hour seen in August 2022 during the continent's energy crisis, it clearly reflected the impact of the attacks on energy markets.
Major container shipping companies, including MSC, Maersk, CMA CGM, and Hapag-Lloyd, have temporarily suspended transit through the Suez Canal due to safety concerns. This decision could potentially impact global supply chains and result in increased freight costs.
In a statement on Saturday, French group CMA CGM announced that ships scheduled to pass through the Red Sea had been directed to pause their voyages "until further notice," citing a worsening situation and heightened safety concerns. The company assured that it is taking all essential measures to maintain its transportation services for its customers.
Analysts have warned that the disturbance to an important trade route between the East and West could impact supply chains. According to Judah Levine, head of research at logistics company Freightos, global freight may experience higher rates, rerouting, and longer transit times.
Some ships are already being redirected around the Cape of Good Hope in Africa, causing journey times to increase by up to three weeks. According to UBS analysts, even just one week of significant capacity rerouting could have long-lasting effects for several months, due to the delay it would cause. They noted that approximately 30% of global container trade passes through the Suez Canal.
Analysts warned that ongoing disruptions could allow shippers to secure higher-than-anticipated rates when renegotiating long-term contracts in the near future. This story is ongoing and will be continually updated.
Anna Cooban and Rob North contributed reporting.
