/ world today news/ Prolonged blocking of the busy Suez Canal will lead to serious losses for many companies and disrupt trade. In this story, however, there are not only those who have suffered – Europe and the Middle East, but also those who can win. Russia is among them. How can this emergency be beneficial to our country?
One of the largest ships in the world, the 400-meter long container ship EverGiven, which is designed to carry at least 20,000 containers, is the culprit behind the suspension of traffic on the Suez Canal. It is one of the largest container ships available today. And it is owned by “Evergreen” company.
This colossus ran aground at the 101st kilometer of the Suez Canal, blocking the passage of at least a hundred ships.
The first version: the pilot lost control due to strong winds. The second reason: there was a power failure, the ship lost control – and the pilot could not do anything, the ship was stuck.
Attempts to move the stranded ship are still fruitless. And so far there is no information on how long it will take for the operation itself and the restoration of normal traffic on this busiest sea trade route.
The information that appeared in the “Financial Times” that the ships will pass through the old sections of the canal surprised experts. “There are old sections in the northern part of the canal; line connects Port Said with the Great Salt Lake. But in the south, directly between the Great Salt Lake and Suez, there is only one arm, and EverGiven is blocking it,” commented Mikhail Voitenko, editor-in-chief of the online publication “Maritime Bulletin”.
No one knows how long the blockade of the Suez Canal will last. Some believe that it will be possible to deal with it in one day, others insist that at least two days are needed, and still others do not rule out a prolonged blockade for a week or even two.
“It is difficult to predict how soon the ship will be released – it may take a long time,” Voitenko says. “If in the next few days it is pulled out of the shallows, it will not affect the economy. If there is an operation related to, for example, the removal of the containers from the ship, which takes weeks or months, then it will be possible to talk about possible damage, “the expert believes.
“Moving such a large container ship is not easy. If it cannot be removed from the shoal with the help of tugs, then most likely the ship will simply be unloaded and the sand around the bottom of the ship will be removed. And it will take time, “said Ana Zaitseva, an analyst. In addition, it will take more time for traffic to return to schedule.
Incidents like this are not common, but they do happen. The last such story happened in 2014. Then the traffic through the channel was stopped by the tanker “Tropic Brilliance”, owned by the Russian company “Sovkomflot”. At that time, 135 ships lined up in the traffic jams. Thirty years before that, there had been no such serious incidents. Then traffic through the Suez Canal was stopped for three days.
This incident is of great importance due to the heavy load on the channel. About a third of all container ships and about an eighth of all world trade pass through the Suez Canal, says Alexander Kuptsikevich of EFX Pro.
A significant part of the trade is in crude oil. About 12% of the total volume of world trade with it or about 600 thousand barrels of oil pass through the Suez Canal daily.
According to various sources, several tankers with 10-13 million barrels of oil are now stuck in the channel, which is 10.5-14.7% of the world’s daily oil consumption, Zaitseva points out.
This situation threatens to disrupt the energy supply schedule, so this was immediately reflected in the rise in oil prices, which was also well received by the Russian ruble. “EverGiven news immediately sent oil higher, allowing it to add $2.4 from the four lost the previous day,” Kuptsikevich said.
In recent days, oil began to fall – and most likely will continue to fall if it were not for the incident in the Suez Canal, said Igor Yushkov, an expert at the Financial University of the Government of the Russian Federation, an expert at the National Energy Security Fund. “Oil was trading higher on expectations that the pandemic was over, vaccinations were starting and everything would be restored. But in reality, oil demand has not returned to previous indicators, the pandemic continues, there are problems with vaccinations and new lockdowns have begun in Europe. Traders noted that overproduction in the global oil market remains. That’s why oil prices have fallen in recent days,” the expert explains.
Unforeseen story with Suez Canal helps oil hold up. Expensive oil for Russia, where budget revenues are half dependent on oil and gas exports, is certainly a good development. In addition, the incident promises to increase the demand for Russian oil and oil products from European consumers. Because Russia has no problems with their delivery.
“We may see delays in the supply of both oil from the Middle East and a number of African countries that supply raw materials through the Suez Canal. Therefore, Europe will have to absorb its stocks in the warehouses in every refinery and port, as well as buy more oil and oil products from Russia “- predicted the expert of the Fund for National Economic Security.
If the forecasts for the correction of the situation in the Suez Canal are disappointing, then ships may begin to bypass Africa through the Cape of Good Hope, which will significantly lengthen and make the delivery of goods more expensive. Due to the shortage of tankers, the price of transportation will increase, as will the price of marine fuel, which is still produced from oil, notes Yushkov. This is also a positive moment for commodity prices.
In addition, this whole story can also be in favor of “Gazprom”. “We could see a rise in spot gas prices in Europe as gas carriers also pass through the Suez Canal. For example, LNG comes through the canal from Qatar, which is one of the largest suppliers of liquefied natural gas. But due to the closure of the canal, Qatari LNG will go to the Asian markets,” predicted the FNES expert.
This story will also be reflected in Russian LNG exporter Novatek. Yushkov believes Novatek would cancel plans to transport LNG using nuclear icebreakers along the Northern Sea Route to Asia if it had such plans. Because in January one of his two tankers suffered an engine failure and had to go to France for repairs, and the route was through the Suez Canal. If something happens to the tanker now, it will not be possible to repair it and Novatek will not dare to take such risks.
In addition, the company will have an excellent opportunity to send LNG to Europe, where gas from the Middle East cannot reach and where prices for it will increase. “This story with the Suez Canal can ensure supplies of LNG from Yamal to the west,” Yushkov does not exclude.
The problems with the Suez Canal also give Russia good reason to remind the world of the need to have an alternative sea route from Asia to Europe, such as the Northern Sea Route. That one route cannot be relied upon so much for the delivery of goods.
“It is possible to promote the idea of an alternative route, another thing is that now hardly anyone will change their route on the Northern Sea Route, where at this time of the year the ice load is the strongest. Also, nuclear icebreakers are not as wide as the ships that pass through the Suez Canal. If this story happens in August or September, then it would be possible to divert ships from the Suez Canal to the Northern Sea Route, because these are the most favorable months for sailing,” the source concluded.
Translation: V. Sergeev
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