Monday, December 18, 2023 11:01:55 AM
Oil and gas prices surge as BP stops Red Sea shipments following Houthi attacks
By Hanna Ziady, CNN
3 minute read
Updated 9:54 AM EST, Mon December 18, 2023
Armed men stand on the beach as the Galaxy Leader commercial ship, seized by Yemen's Houthis last month, is anchored off the coast of al-Salif, Yemen, December 5, 2023.
Armed men stand on the beach as the Galaxy Leader commercial ship, seized by Yemen's Houthis last month, is anchored off the coast of al-Salif, Yemen, December 5, 2023.
Oil and natural gas prices rose sharply Monday after BP (BP) said it would pause all shipments through the Red Sea because of increased attacks on commercial vessels by Houthi militants in Yemen.
The decision by one of the world’s biggest oil companies follows similar moves by major shipping firms, something analysts have warned could ripple through global supply chains and increase the costs of moving goods.
“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,” the company said in a statement. “We will keep this precautionary pause under ongoing review, subject to circumstances as they evolve in the region.”
Oil posted steep gains on the news. Brent crude, the global benchmark, was up 2.7% at $78.68 a barrel by 9.30 a.m. ET. US oil also rose 2.7% to $73.38 a barrel.
The news also affected the natural gas market. Europe’s benchmark natural gas prices surged more than 9% to above €36 ($39.65) per megawatt hour. That’s still just a fraction of the all-time high of €320 ($349.24) per megawatt hour seen in August 2022, at the height of the continent’s energy crisis, but still the most concrete sign yet of disruption in commodity markets following the attacks.
Aerial attacks by the Iran-backed Houthis, who support Hamas and the Palestinian people, have become more frequent since the outbreak of the Israel-Hamas war. The group has claimed the attacks as revenge against Israel. The United States and its allies are now considering whether to expand an existing maritime taskforce in the Red Sea to protect commercial vessels.
Shipping companies pause Red Sea transit
The world’s biggest container shipping companies have also paused transit through one of the world’s vital trade arteries in a move that experts say could snarl supply chains and drive up freight costs.
MSC, Maersk, CMA CGM and Hapag-Lloyd all said in recent days that they would avoid the Suez Canal over safety concerns. Evergreen Group’s container shipping arm joined that list Monday, saying in a statement that it would suspend its Israel import and export service “with immediate effect until further notice.”
On Friday, Houthi rebels claimed responsibility for attacks on two MSC vessels.
“The situation is further deteriorating and concern of safety is increasing,” French group CMA CGM said in a statement Saturday as it announced that ships due to pass through the Red Sea had been instructed to pause their journeys “until further notice.”
“CMA CGM is taking all necessary steps to preserve its transportation services for its customers,” the company added.
But analysts have cautioned that the disruption to a key trade route between East and West could have knock-on effects on supply chains.
“Global freight can expect to see rate increases, rerouting and longer transit times,” said Judah Levine, head of research at logistics company Freightos.
Already, some ships are being rerouted via the Cape of Good Hope in Africa, adding up to three weeks to journey times and increasing fuel costs.
“This means that one week of meaningful capacity rerouting could have ripple effects for several months ahead, after a lag of a few weeks,” UBS analysts wrote in a note Sunday, highlighting that around 30% of global container trade passes through the Suez Canal.
The analysts said that, if the disruptions persisted, shippers might be able to “lock in higher-than-expected rates” as they renegotiate long-term contacts in the coming days and weeks.
This story has been updated with additional context and developments
Recent DJT News
- Trump Media Expands TV Streaming Delivery Network to Multi-site Operation • GlobeNewswire Inc. • 09/30/2024 08:30:00 PM
- Visa Faces Monopoly Lawsuit; Meta Introduces Celebrity Voices for Chatbot; Stellantis on the Hunt for New CEO • IH Market News • 09/24/2024 10:15:50 AM
- Apollo Eyes $5 Billion Investment in Intel; TSMC and Samsung Explore UAE Chip Projects, and More • IH Market News • 09/23/2024 10:32:25 AM
- Nike Shares Surge 7% Pre-Market as Elliott Hill Becomes CEO; FedEx Shares Tumble 13% After Profit Miss • IH Market News • 09/20/2024 10:02:58 AM
- AIG names new CFO; Progyny Drops 24% After Losing Key 2025 Contract; Exicure Jumps 190% With Nasdaq Extension • IH Market News • 09/19/2024 10:26:48 AM
- Meta Strengthens Child Privacy on Instagram; Google Overturns $1.7 Billion Antitrust Fine; Snap Updates Spectacles • IH Market News • 09/18/2024 10:13:07 AM
- Intel Secures $3.5 Billion Subsidy, Stellantis Backs EU Emissions Targets, BP and Apollo Reach $1 Billion Deal • IH Market News • 09/16/2024 10:03:27 AM
- GameStop plunges 11% on stock offering, DJT drops post-debate, GSK fails shingles vaccine trial • IH Market News • 09/11/2024 10:25:41 AM
- Apple Loses EU Dispute; Google’s $2.7 Billion Fine Upheld; Oracle Shares Surge 9% • IH Market News • 09/10/2024 10:02:31 AM
- Big Lots Falls 27%, Considers Bankruptcy; DraftKings Acquires Simplebet, Berkshire Hits $1 Trillion • IH Market News • 08/29/2024 10:06:50 AM
- Form 424B3 - Prospectus [Rule 424(b)(3)] • Edgar (US Regulatory) • 08/23/2024 09:17:24 PM
- Form 424B3 - Prospectus [Rule 424(b)(3)] • Edgar (US Regulatory) • 08/23/2024 09:16:45 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/23/2024 09:15:56 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/23/2024 09:09:41 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/23/2024 08:56:38 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/23/2024 08:51:22 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/23/2024 08:43:35 PM
- Form S-1 - General form for registration of securities under the Securities Act of 1933 • Edgar (US Regulatory) • 08/23/2024 08:42:39 PM
- Cruise and Uber Join Forces for Robotaxis, Alibaba Shifts Primary Listing to Hong Kong, Altria Hikes Dividend 4.1% • IH Market News • 08/23/2024 12:20:26 PM
- Walmart Sells JD.com Stake, Microchip Suffers Cyberattack, Union Pacific Warns of Strike in Canada, and Latest News • IH Market News • 08/21/2024 12:12:11 PM
- FuboTV Soars 12% After Venu Sports Block, Goldman Sachs Lowers U.S. Recession Odds, BHP Ends Chile Strike • IH Market News • 08/19/2024 09:28:19 AM
- Google Forced to Modify Play Store, Apple Innovates, Victoria’s Secret Hires CEO, Mars Buys Kellanova • IH Market News • 08/15/2024 10:05:46 AM
- Google Mandated to Modify Play Store, Apple Innovates, Victoria’s Secret Hires CEO, Mars Buys Kellanova • IH Market News • 08/15/2024 10:05:46 AM
- Starbucks Rises 3%; Disney Unveils New Films and Expansions; Uber CEO Questions Tesla Robotaxi Viability, and More • IH Market News • 08/12/2024 09:46:16 AM
- Form 424B3 - Prospectus [Rule 424(b)(3)] • Edgar (US Regulatory) • 08/09/2024 08:59:07 PM
Transforming Alzheimer's Treatment: Innovative Combinations to Boost Cognition • PFE • Oct 2, 2024 9:00 AM
Unitronix Corp Unveils Cryptocurrency Investment Portfolio Strategy • UTRX • Oct 2, 2024 8:40 AM
Integrated Ventures, Inc Reports Total 2024 Revenues Of $5,863,935 vs $3,862,849 for 2023. • INTV • Oct 1, 2024 9:00 AM
Nightfood Signs Letter of Intent to Acquire Los Angeles Cooking School, Integrating Automation and Robotics with World-Class Culinary Training • NGTF • Oct 1, 2024 8:30 AM
ZenaTech, Inc. (NASDAQ: ZENA) To Commence Trading Today • COOP • Oct 1, 2024 7:00 AM
Element79 Gold Corp secures loi for launching tailings reprocessing business in Arequipa, Peru • ELMGF • Oct 1, 2024 6:38 AM