As a necessary route through the Suez Canal, the Red Sea plays an important role in the world's maritime routes. Following the announcement of the suspension of the Red Sea route by a number of shipping companies, global shipping freight rates continue to be the best, and many ships have to be diverted. Therefore, the global energy market is becoming more and more local and regional, and the global energy ** in the past seems to be "dividing into two", forming two major plates, east and west, and the Suez Canal has become the dividing point.
Two major plates. With the continuous fermentation of the Red Sea crisis and the soaring freight rates of oil tankers, Bloomberg said on 4** that the world is forming two major plates, east and west. Among them, the western plate is centered on the North Atlantic basin, including the North Sea and the Mediterranean, avoiding the Red Sea, connecting Europe and the Middle East around the Cape of Good Hope in Africa, and also connecting Europe and the Americas across the Atlantic. The eastern plate is eastward through the Persian Gulf, covering the Indian Ocean and East Asia.
Some European refiners stopped buying Iraq's Basra** last month, while many European traders are spree-buying the North Sea and Guyana**, traders said. Katona, chief oil analyst at data analytics firm Kepler, believes that in the face of the high transportation costs caused by the Red Sea crisis, it is wise for companies to make business choices based on logistics.
Since mid-December last year, oil tanker freight rates from the Middle East to ports in northwestern Europe have soared by about half. As a result, the throughput of merchant ships in the Suez Canal fell to the lowest level in nearly three years. Statistics show that as of January 14, the seven-day moving average of bulk carriers, container ships and tankers passing through the Suez Canal fell to 49 times a day.
Kepler said in a report released on Jan. 30 that tanker traffic through the Suez Canal in December was down 23% from November 2023. The decline was even more pronounced for LPG and LNG, falling by 65% and 73%, respectively.
All this is due to the impact of the disruption of shipping in the Red Sea. Since the outbreak of the new Palestinian-Israeli conflict, the Houthis have repeatedly attacked targets in the Red Sea waters using missiles and drones. Since December last year, merchant ships have been under frequent attacks here, and more and more cargo companies have decided to suspend the route.
According to the analysis of the British "Global ** Review", at first, the Houthis attacked mainly container ships in the Red Sea, and the passage of oil and gas carriers was relatively stable. But since mid-to-late January, Houthi attacks on oil tankers have increased. Statistics show that Qatari liquefied gas carriers have not passed through the Red Sea and the Suez Canal since mid-January, and oil tankers departing from Kuwait to Europe since late January have also avoided the Red Sea and Suez Canal routes.
Pushing up costs. The Red Sea-Suez Canal was originally a major route for global oil and gas trading. After the outbreak of the Russia-Ukraine conflict in 2022, the Suez Canal and the Sumaid pipeline have increased the volume of oil and gas traffic significantly, mainly due to the closer oil and gas exchanges between the Middle East and Europe, and Russia and India and other Asian regions. In the first half of 2023, the proportion of global ** and refined oil shipping volume through the Suez Canal will reach 12% and 184%；Liquefied natural gas (LNG) shipments account for about 8% of the world's LNG volume**.
The impact of the Red Sea crisis on shipping costs is clear. Bloomberg reported at the end of January that 3The cost of 50,000 tons of fuel soared by nearly half in a week, and the cost of transportation exceeded $4 per day$90,000, the highest since 2022. At the same time, the cost of transporting large oil tankers from the Middle East to Japan has also reached a new high. Circumnavigation of the Cape of Good Hope in Africa has led to an increase in the range and duration of tankers, which in turn has increased tanker occupancy and reduced the number of available tankers. Therefore, even if the tanker does not need to circumnavigate the Cape of Good Hope, the reduced capacity will lead to higher fuel prices.
The International Energy Agency (IEA) said the risk of disruption to oil shipments through the Suez Canal remains high, with about 7.2 million barrels per day of oil shipments and refined products passing through the segment, accounting for about 10% of the world's seaborne oil**. Unlike the Strait of Hormuz, the Houthi Bab el-Mandeb Strait is a convenient passage to the Suez Canal and Europe, but it can be replaced, while the latter itself is an important oil shipping route.
Recently, global oil prices have also been in the world, with Brent** up about 8% since December last year. Diesel and jet fuel destined for Europe from India and the Middle East, as well as naphtha (one of the petroleum products, also known as chemical light oil and crude gasoline) from Europe to Asia, have been the hardest hit by the Red Sea crisis. Naphtha** in Asia recently hit a new high in nearly two years. Overall, due to the impact of costs, traders are more inclined to purchase locally and in the surrounding area.
Oil prices held steady. For now, the Red Sea crisis seems unlikely to end in the short term, and the World Bank's commentary published last month expressed deep concern about its further impact. The article argues that generally speaking, January and February are the off-season for Red Sea shipping, because the demand during this time is not strong. However, by March and April, global ** demand is usually stronger, and if the Red Sea crisis persists into March and April, it will have a more serious impact, which may be no less harmful than the global ** chain crisis during the new crown epidemic.
Giovanni Staunovo, commodities analyst at UBS, said that while diversification of import channels is still possible, it is becoming more costly. Unless costs can be passed on to end consumers, refiners' margins are expected to suffer.
The geopolitical status quo is not in favor of energy**, Adi Imsirovic, director of Surrey Clean Energy, noted, "If I were a buyer, I would be cautious. This is a tough time for refiners, especially for Asian refiners – they need to be more nimble. ”
However, Lin Boqiang, dean of the China Energy Policy Research Institute at Xiamen University, believes that the Red Sea crisis may change the pattern, but the total supply will not change. Although the Houthi actions have caused some damage to commercial shipping companies such as Maersk, the Houthis have so far failed to attack oil tankers and oil production facilities, in part due to the détente between Saudi Arabia and Iran. OPEC** production rose to 26.7 million barrels per day in December 2023, up from 2,662 in November 2023, before the Red Sea crisis, data released by OPEC showed80,000 barrels per day.
In addition, there has been a significant increase in production in oil-producing countries other than OPEC. The data showed that countries such as the United States, Brazil, Canada and Guyana broke record oil production, and Iran, which is still struggling under US sanctions, even increased its oil exports by about 500,000 barrels per day. Although North America's cold wave caused North Dakota's ** production to fall by 650,000-700,000 barrels per day, the U.S.** production climbed to 13.3 million barrels per day in the week ended January 12, a record high.
An Guangyong, an expert of the Credit Management Committee of the China Mergers and Acquisitions Association, mentioned that the International Energy Agency previously lowered its forecast for global oil demand growth in 2024, from 1 million barrels per day to 880,000 barrels per day. This adjustment confirms the view that weak global growth prospects and progress in energy efficiency will weigh on oil consumption. The subsequent trend of international oil prices may be affected by this adjustment.
Beijing Business Daily reporter Fang Binnan Zhao Tianshu.