Energy
Wednesday, January 17th, 2024 8:57 pm EDT
Key Points
- Red Sea diversions causing ripple effects in energy markets and leading to a potential cargo container supply crunch.
- Shipping analysts predict a prolonged crisis of at least six months to a year, with soaring freight rates and equipment shortages.
- Shell rerouting oil tankers, anticipating a 5-10% short-term price impact. Tanker operators like Torm, Hafnia, and others avoiding the Red Sea.
- Egypt’s economy impacted, potential losses of $5 to $7 million for Suez Canal Authority. Container vessels paying $500,000-$600,000 per transit rerouted.
Due to repeated attacks on Houthi rebels, shipping experts anticipate that the crisis may persist for months, potentially leading to a cargo container supply crunch. Honour Lane Shipping predicts an informal resolution period of at least six months to a year, with soaring freight rates and equipment shortages continuing until the third quarter. Shell has confirmed the rerouting of its oil tankers around the Red Sea, expecting a 5-10% price impact in the short term. This diversion is affecting Egypt’s economy, heavily reliant on the Suez Canal, and may result in a 40-50% drop in all vessel Suez crossings. Logistics CEOs warn of a container crunch, impacting global shipping costs and potentially causing delays and shortages. East Coast and Gulf Coast freight rates have surged, with some logistics companies rerouting to the U.S. West Coast, leading to increased rates. The article highlights potential challenges for retailers, with some companies experiencing manufacturing halts and delays.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/01/17/what-a-prolonged-red-sea-crisis-means-for-inflation-and-world-economy.html
