BP and Equinor divert tankers from Red Sea

Reuters/Houthi Military Media/Handout

• Houthi militants firing missiles
• Brent crude $78.07 on Tuesday
• Crude and LNG unlikely to be affected

Two European oil and gas companies, BP of the UK and Equinor of Norway, have joined a group of shipping lines that are diverting their tankers away from the Red Sea, following missile and drone attacks by Yemen’s Houthi militants.

BP said in a statement: “The safety and security of our people and those working on our behalf is BP’s priority.”

The company said it would keep the ban under review.

On Monday Lloyd Austin, the US secretary of defence, announced Operation Prosperty Guardian, a maritime taskforce intended to protect commercial vessels from the attacks by the Iran-aligned militants.

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Benchmark Brent crude was trading at $78.07 on Tuesday, having risen 2 percent in a week. WTI was down from previous highs to $72.80, having gained 1.25 percent in a week.  

European natural gas prices jumped 13 percent on Monday, but fell slightly on Tuesday as North Asia and Europe are viewed as well stocked for winter.

The disruption to energy flows in the Red Sea is unlikely to affect crude oil and liquefied natural gas (LNG) prices significantly as production should not be directly affected, according to investment bank Goldman Sachs.

Several container shipping lines, including CMA CGM of France, MSC of Switzerland and AP Moller-Maersk of Denmark, said over the weekend that they would be avoiding the Suez Canal and Red Sea. 

Matthew Wright, principal freight analyst at Kpler in Dubai, said on Monday that “safe passage through the Red Sea is now a serious concern”. 

Eight percent of global seaborne bulk trade passes through the Suez Canal, according to Kpler.

Jet fuel is the most exposed commodity, Wright added. More than 30 percent of seaborne jet fuel is shipped via the Suez Canal. Naphtha, diesel, grains and oilseeds and chemical products are also at risk, he warned. 

Maersk said on Friday it was “deeply concerned” about an incident involving one of its ships, the Maersk Gibraltar, en route from Salalah in Oman to Jeddah in Saudi Arabia. It said the vessel had not been hit in the attack. 

CMA CGM, the third largest shipping container group in the world, said in a statement that it too was “deeply concerned” about attacks on commercial vessels in the Red Sea. It said the situation was deteriorating and it was pausing shipping “with immediate effect”. 

The frequency of attacks has been rising in recent weeks although few, if any, casualties have been reported. Last week a Houthi spokesman claimed responsibility for a missile attack on a Norwegian tanker, the MT Strida. 

In November Houthi fighters seized the Galaxy Leader, a Japanese ship, and detained its multi-national crew in the port of Hodeidah. 

The nearby Bab al-Mandab is a 20-mile-wide water gateway to the Red Sea. It is one of the world’s most important routes for global commodity shipments connecting the Gulf, Asia and Europe. 

The US Energy Information Administration says the route accounted for around 12 percent of total seaborne-traded oil shipments in the first half of 2023. LNG shipments using the route accounted for about 8 percent of worldwide LNG trade.