Crude oil worth US$400 million halted by Suez Canal blockage, with at least 6.3 million barrels stra

At least seven vessels bearing 6.3 million barrels of crude oil have been delayed because of the accident, two northbound behind Ever Given, and five southbound, according to commodities analyst Kpler that tracks bulk goods vessels.

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Giant cargo ship causes marine traffic jam by blocking Egypt’s Suez Canal

Giant cargo ship causes marine traffic jam by blocking Egypt’s Suez Canal

Using the Brent crude oil price of about US$64 a barrel as a value proxy – oil prices shot up after the grounding – the seven vessels carry about US$403 million of crude oil. If the Ever Given remains stuck into the weekend, three more vessels carrying 2.5 million barrels of oil, worth about another US$160 million, will join the queue from the south, Kpler said.

Another 15 vessels carrying refined bulk products such as naphtha, jet fuel and petrol have been delayed in crossing the canal due to the congestion, Kpler added. Ten are waiting to the south of the canal, while five others heading south to Asia are stuck in the north.

Five LNG vessels and two liquefied petroleum gas carriers are also either delayed in the canal or are waiting to enter, Kpler said.

“While attempts to clear the ship from the canal continue, this queue will continue to build. A salvage squad from the Netherlands will attempt to dislodge the ship beginning Thursday,” Kpler said.

The delayed ships are either in the canal or waiting at the north entrance at Port Said Anchorage and Great Bitter Lake Anchorage, or in the south at the Southern Suez Anchorage, said energy and commodities analyst Wood Mackenzie.

It said at least one US exporter, the Pan Americas, has likely diverted its LNG cargo in the North Atlantic towards the Cape of Good Hope.

The Ever Given was travelling northbound towards Rotterdam from Yantian in China. The two carriers immediately behind it in the convoy – the container vessel Maersk Denver and the bulk carrier Ruby Asia III – were trapped as they watched the grounding unfold.

Wood Mackenzie principal analyst Mark Williams said container shipping would bear the brunt of this accident.

Supply chain and logistics service provider project44 is tracking 34 other container vessels carrying about 380,000 containers of non-bulk goods either already stuck in the canal or approaching it.

Twenty one of those carriers are within about 100km of the Ever Given waiting in the queue, while 13 other container ships are set to arrive within days.

Ever Given itself holds 20,000 containers of goods.

“It’s another big blow to global trade in an already backlogged and battered supply chain year,” said Jett McCandless, CEO of project44.

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Efforts to free a giant cargo ship blocking Egypt’s Suez Canal

Efforts to free a giant cargo ship blocking Egypt’s Suez Canal

“The vessel has single-handedly put a stop-block in both directions to that vital trade route between Asia and Europe. If they can’t dislodge it with tugs at high tide, they will have to start removing containers to lighten the load and refloat her.”

This brings the total number of goods-laden vessels stuck to about 100, although project44 says more ships, oil tankers, bulk carriers or RoRo vessels – cargo ships that carry wheeled cargo – are being backed up by the hour.

The Suez Canal is one of the busiest trade routes in the world and connects Europe, Asia and Africa. An average of 50 vessels travel through it each day, carrying about 3 million tonnes of cargo, mainly bulk goods such as LNG, oil, and containers. Each year, nearly 20,000 vessels travel the 200-kilometre artificial waterway, accounting for about 12 per cent of world trade by volume.

Ships laden with grains, fertilizers, chemicals, coal, machinery, metal ores and food products all pass through the sea route.

Aside from container traffic, the Suez Canal is important for oil and LNG – meaning prices for the commodities could rise as a result of the blockage.

Oil prices climbed on Wednesday, but soft demand due to Covid-lockdowns in Europe will put a ceiling on the increase, according to energy consultancy, Rystad Energy.

“Just when bullish traders thought that the price party was over, they got an unexpected gift, as the Suez Canal blockage is temporarily disrupting usual tanker traffic and the respective expected oil and LNG deliveries,”said Bjornar Tonhaugen, head of oil markets at Rystad.

“The grounded ship, due to its massive size, is creating some distortion in the flows of crude and products that are transported through the canal and such ‘speed-bumps’ are having a rollover effect on oil prices, as the product will not reach its buyers as quickly as expected.”

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Cargo ship loses more than 1,800 containers in Pacific storm

Cargo ship loses more than 1,800 containers in Pacific storm

He said, however, the effect would likely be small and transient as there were alternative shipping routes for crude and other products.

“But if the blockage lasts for more than a few days, it could impact prices,” he added.

Like Rystad, Wood Mackenzie analysts were optimistic given the high amount of oil stocks being transported in the Atlantic basin.

The impact on LNG supply and prices would also be limited as long as the congestion was resolved within days, Wood Mackenzie principal analyst Lucas Schmitt said. It was fortunate the accident happened in a “shoulder” season when demand was lower.

“Only a handful of LNG cargoes were in the close vicinity of the Suez Canal when the incident started. At this stage, we don’t expect major bottlenecks, unless the situation drags on,” he said.

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