Reeling from the blockage in the Suez Canal, shipping rates for oil product tankers have nearly doubled this week, and several vessels were diverted away from the vital waterway as a giant container ship remained wedged between both banks.
The 400 meters long Ever Given has been stuck in the canal since Tuesday and efforts are underway to free the vessel although the process may take weeks amid bad weather.
The suspension of traffic through the narrow channel linking Europe and Asia has deepened problems for shipping lines that were already facing disruption and delays in supplying retail goods to consumers.
Analysts expect a larger upward impact on smaller tankers and oil products, like naphtha and fuel oil exports from Europe to Asia, if the canal remained shut for weeks.
“Around 20% of Asia’s naphtha is supplied by the Mediterranean and the Black Sea via the Suez Canal,” said Sri Paravaikkarasu, director for Asia oil at FGE, adding that re-routing ships around the Cape of Good Hope could pile about two more weeks to the voyage and more than 800 tonnes of fuel consumption for Suezmax tankers.
Fuel is a ship’s single biggest cost, representing up to 60% of operating expenses.
By contrast, an already weak Asian gasoil, or diesel, market is also being made worse by the blockage since Asia exports the fuel to markets in the west, like Europe, of which more than 60% flowed via the chocked Canal in 2020, according to FGE.
More than 30 oil tankers have been waiting at either side of the canal to pass through since Tuesday, shipping data on Refinitiv showed. Reuters
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