Nine Million Barrels Of Oil Face Delays! Red Sea Crisis Has Scourged The Oil Market

There are signs that the oil market is bracing itself for weeks of shipping disruption in the southern Red Sea. Houthi militants have been attacking wayward merchant ships in the region for months in response to Israel's war in Gaza.

A number of shipowners, brokers and traders said tanker charters carrying crude and fuel oil showed that more and more vessels were being chartered on routes avoiding the dangerous waters. Some charters are often scheduled up to a month in advance.

The U.S. and U.K. launched an airstrike campaign against Yemen's Houthis on Jan. 12, further exacerbating the chaos in the region's shipping situation, especially after a flurry of warnings from Western navies to keep ships away. The Houthis have threatened to retaliate against merchant ships from both countries, and more shipowners are choosing to avoid the prime route, which typically handles 12 percent of the world's maritime trade, as a result.
"More and more shipowners are avoiding the region. Issues that looked like they could be resolved in a matter of weeks can now affect months." Euronav NV CEO Alexander Saverys said. The company's fleet can carry more than 50 million barrels of oil.

Saudi Arabia and Iraq, totaling nearly 9 million barrels of oil, could face transportation delays as tankers are rerouted around Africa rather than through the Red Sea, according to industry sources earlier this week. At least two of those vessels, totaling nearly 3 million barrels of Saudi crude and refined products, could see their shipments delayed after loading in the Persian Gulf this month. Five other tankers carrying up to 6 million barrels of Iraqi crude are also being diverted from the Red Sea.