According to experts at Lloyd's List, the shipping company, the blocking of ships in the Suez Canal after the 400m-long vessel has become wedged across the canal, greatly undermines the entire world trade. The giant container ship, Ever Given, blocked the Suez Canal on the night of March 24 amid high winds and a dust storm. So far, all attempts to get the ship off the shoal and clear the channel have failed.
The Suez Canal, which separates Africa from Asia, accounts for 12% of global sales. Not only consumer goods, but also liquefied natural gas, crude, and oil are exported daily through the no-lock shipping channel in Egypt. The whole volume of energy transported through this channel totals approximately 5-10% of all global supplies. Therefore, blocking one of the world's busiest trade routes has had become a pressing issue. Lots of ships with a great volume of goods lost the opportunity to reach their destination on time. World trade loses about $400 million per hour.
At the same time, the cost of sea transportation to some destinations has increased several times. For example, the price of transporting a 12-meter container from China to Europe has soared fourfold compared to last year's cost up to $8,000. Revenue from giant tankers (VLCC), which transport oil from the Middle East to China, rose to $1,371 a day. The supply of light oil products from the Krasnodar Krai of the Russian Federation to France rose from $1.49 per barrel to $2.58, even though this route does not run through the Suez Canal. The cost of the cargo accumulated at the entrance to the Suez Canal, including oil, has already grown to $10 billion.
Three new liquefied natural gas (LNG) tankers of Russia's Novatek - Yamal Spirit, Clean Horizon, and Yenisei River are also stuck in a traffic jam near the blocked channel. Experts have already predicted an uplift for spot gas prices. However, this growth is likely to be very limited, because demand for gas falls in the spring period.
Ship operators have already begun to address the problem and they are actively redirecting ships on a new, longer route around Africa. The Suez channel management started to deepen the bottom along the perimeter of the container ship with the help of dredgers. It is also planned to dig out the sand and pull the huge stranded vessel in the channel.
The senior foreman of the emergency rescue team that participated in the re-block of the channel, suggested that it would be possible to lift the ship from the shoal only with the help of the spring tide, which is expected in the Suez Canal next Sunday or Monday. The water level is expected to rise by 18 inches, providing more opportunities to pull the vessel free in a high tide.
Ever Given is unlikely to be moved until next week. Many experts believe that the clearing of the entrance of the channel will take more than one week. This will reduce the level of supply of raw materials and other refined products on the world market. Therefore, after yesterday's sell-off, oil prices are rising steadily again today. Thus, Brent crude futures rose by 2.24% to $63.40 per barrel (yesterday, they decreased by 3.8%). WTI futures climbed by 2.75% to $60.16 per barrel after yesterday's drop of 4.3%.
Although the supply of energy resources on the market is likely to significantly decrease, oil may continue to tumble for the third week in a row. It is due amid the expectations of weak demand for oil in the light of the re-introduction of lockdowns in Europe.