par Florence Tan, Jessica Jaganathan, Roslan Khasawneh et Gavin Maguire
CAIRO, March 26 (Reuters) – Efforts intensified on Friday to try to free the container ship MV Ever Given which had been stranded since Tuesday across the Suez Canal as the blockage of this crucial sea route led to a sharp rise in tariffs oil sea freight and disruption of global supply chains.
The cost of shipping petroleum products by sea has nearly doubled since the grounding of the 400-meter-long vessel interrupted traffic through one of the busiest trade routes in the world.
Efforts to dislodge it could take several weeks and be complicated by unstable weather conditions, threatening to impose costly delays on shipping companies already facing the repercussions of the health crisis that are penalizing their activity.
The Japanese owner of the stranded container ship, Shoei Kisen, on Friday denied information from the Nikkei business daily that his aim was to get the ship afloat before Saturday evening (Japanese time).
The Japanese company said the efforts to free the container ship were still underway.
The Suez Canal Authority (SCA) has announced that the vessel’s towing operations will resume as soon as the dredging work to clear 20,000 cubic meters of sand from its bow is completed, estimating that this task is currently being completed at 87 % about.
The SCA also welcomed the US aid offer.
PRICE INCREASE
Blocking traffic through this channel connecting Europe to Asia is exacerbating the difficulties of global supply chains already disrupted by the consequences of the COVID-19 pandemic.
On Friday morning, around 20 ships were visible from the shore of Port Said, at the mouth of the canal on the Mediterranean, according to a Reuters reporter.
The fear of seeing this blockage lastingly disrupt the world oil market has led to a marked rise in prices, the price of a barrel of Brent rising nearly 3% to more than 64 dollars a barrel early Friday afternoon.
According to data from Refinitiv, more than 30 tankers have been waiting since Tuesday on both sides of the canal, unable to make the crossing.
The fact that this incident occurs against a backdrop of weak seasonal demand for crude and liquefied natural gas (LNG) could limit the impact on prices, however, according to analysts.
According to cargo tracking data specialist Kpler, 10 tankers loaded with crude are waiting to be able to enter the channel.
Nearly four million barrels, mainly Kazakh and Russian oil from the Urals, are also said to be on hold according to traders, who also point to tankers loaded with Libyan, Azeri and North Sea crude destined for Asian refiners.
The Egyptian pipeline operator SUMED quickly offered storage space to traders of petroleum products, but the latter prefer to wait for the moment in order to avoid high additional costs.
TWO ADDITIONAL WEEKS
If the blockage were to persist for several weeks, analysts, on the other hand, expect a greater impact for small tankers and exports of petroleum-related products such as naphtha and fuel oil from Europe to Asia.
“About 20% of naphtha in Asia is supplied from the Mediterranean and the Black Sea and passes through the Suez Canal”, underlines Sri Paravaikkarasu, oil sector specialist for the Asia and Middle East zone within the industrial consultancy firm FGE .
According to her, hijacking ships to bypass the African continent via the Cape of Good Hope could extend transfers by two weeks, which means additional fuel costs.
While more than 60% of Asian exports to the West passed through the Suez Canal in 2020 according to FGE, the current blockage is already weighing on the already faltering Asian diesel market.
Regarding LNG, Kpler reports 10 cargo ships – including six loaded – blocked and several hijacked tankers.
If the blockage lasts for two weeks, delivery to Europe of around a million tonnes of LNG could be delayed, Rystad Energy’s gas and electricity market manager Carlos Torres Diaz said on Thursday.
According to him, some European buyers, who foresee delays of LNG from Qatar, could consider other options such as buying on the spot market.
In the meantime, traders have told Reuters to take a wait-and-see stance to see if a larger tide expected on Sunday will improve the situation. (With Koustav Samanta and Nadine Awadalla; French version Claude Chendjou and Myriam Rivet, edited by Jean-Stéphane Brosse)
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