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More ships avoid Red Sea as Houthis hit ship carrying steel in Gulf of Aden

More commercial shipping avoided transiting the Red Sea Jan. 15 as a Houthi missile hit a US-owned dry bulk carrier in the Gulf of Aden in the first retaliation since US-led forces struck Houthi military sites in Yemen over the weekend.

The Gibraltar Eagle was struck by a Houthi anti-ship ballistic missile from Yemen at around 1300 GMT, the US Central Command said in a statement, adding that the ship reported no significant damage or injuries and was continuing its journey. Separately, the UK’s Maritime Trade Operations reported that a vessel in the Gulf of Aden was hit “on the port side from above” by a missile.

The 64,000 dwt Gibraltar Eagle, which last departed South Korea’s Pohang port on Dec. 24 carrying steel products, was seen heading east away from the Bab al-Mandab Strait after making a sharp U-turn earlier in the day, according to S&P Global Commodities at Sea vessels tracking.

CENTCOM said a US fighter aircraft shot down a missile fired from Yemen on Jan. 14 and that a second missile, fired on Jan. 15 toward the southern Red Sea commercial shipping lanes, failed in flight and landed in Yemen.

A total of seven commercial ships were seen transiting the Bab al-Mandab Strait in the first nine hours of Jan. 15, according to S&P Global Commodities at Sea, down from an average of 20 ships in the same time period over the week to Jan. 12, the data showed. As of 1700 GMT, some 250 commercial ships were transiting or underway in the Red Sea and Suez Canal waterways of which 112 were crude, products, chemicals, LNG and LPG tankers, according to CAS. That compares to more than 290 commercial ships, of which 176 were tankers, early Jan. 12, the morning after the first US-led strikes on Houthi targets Yemen.

Trade upheaval

Swathes of tanker owners and container shipping operators have now announced a suspension of Red Sea voyages due to the security risks transiting the trade chokepoint with many choosing to take the take the longer route around the Cape of Good Hope. Attacks on commercial shipping in the Red Sea since December have forced more than 2,000 ships to divert voyages thousands of miles, according to US estimates, pushing up shipping costs and fueling marine bunker fuel demand.

International shipping body BIMCO extended Jan. 15 its advice to shipping companies to “consider avoiding shipping operations in the area and reposition to north of 18N or east of 46E due to the security risk in the area.

“It is currently not possible to foresee how the security situation develops, but the present security conditions may prevail for still some time,” BIMCO said.

BIMCO, whose members cover 62% of the world’s tonnage, has previously advised its members to halt Red Sea transit for up to 72 hours as a result of the US strikes and the potential for wider escalation. Intertanko, the International Association of Independent Tanker Owners, also recommended its members to halt Red Sea transit for up to 24 hours.

Japan’s Mitsui O.S.K. Lines, among the world’s largest ship operators, on Jan. 15 also halted ship entry into the Red Sea from the Suez Canal and the Gulf of Aden as part of its response to ensure the safety of its ships amid escalating security threats. Clean tanker firm Torm said Jan. 12 it was pausing all voyages through the affected region and bigger tanker operators including A. P Moller-Maersk, MSC, Evergiven have said they will avoid the area.

LNG market participants were closely watching three laden Qatari LNG carriers, scheduled to enter the Red Sea and the Suez Canal for northbound transits, and any change in their shipping routes amid the escalating conflicting in the region could have major implications for Qatar’s LNG flows to Europe.

Price impact

Since Nov. 19, 2023, there have been at least 21 confirmed incidents involving Houthi attempts at seizing or striking commercial vessels, with four other incidents also likely to have had Houthi or Iranian involvement, S&P Global Market Intelligence said in a Jan. 12 report.

“The scale of the military response…is unlikely to deter the Houthi, or remove their capability to mount further attacks against international shipping and naval forces in the Red Sea,” S&P Global’s head of Middle East and North Africa Country Risk Jack Kennedy said in a note. “Houthi attacks are likely to continue to target international vessels irrespective of their public connection to Israel, with Houthi statements on Israeli affiliation or destination obfuscating truer motivation and intent.”

Rapidan Energy Group has told clients there is a 30% chance of a material disruption in oil and LNG flows from the region and until very recently the market was pricing in closer to 0%.

“We estimate there should be at least $12/b of geopolitical risk in crude, based on our 30% disruption probability and the amount of oil at risk in the Gulf region and Hormuz. The market has begun to price that risk in but has more to do,” Rapidan president Bob McNally said.” Neither Washington nor Tehran want direct confrontation. But you can’t always get what you want. This conflict remains firmly in escalation mode and with no end in sight.”

The Platts Bunkerworld 0.5% sulfur fuel oil index, drawn from prices across 20 different ports, ended Jan. 12 at $606/mt, it was up $6/mt on the day and is up from when the Red Sea influence on shipping markets began in earnest in mid-December, at 1% from Dec. 15. Platts is part of S&P Global Commodity Insights.

In dirty tankers, Platts assessed the rate to carry a 140,000 mt cargo of crude oil on the Persian Gulf-UK Continent route at $2.88/mt Jan. 15, up $1.15/mt on the day and up 52% from Dec. 15.

Platts assessed the rate to carry a 40,000 mt cargo of clean products on the Persian Gulf-UK Continent route at $67.5/mt Jan. 15, flat on the day but up 45% from Dec. 15.

By far the biggest impact on commercial shipping has been felt by the container shipping market. Platts assessed its container index at $2,837.37/ 40 foot equivalent Jan. 12, down $3.88/feu on the day but up 163% from Dec. 15 at around 15-month highs.
Source: Platts

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