The attacks led to a sharp rise in shipping costs and insurance premiums, but their impact on oil flows was less than feared as shipping companies continued to use the main east-west corridor. The Houthis, who said they were targeting ships heading to Israel, attacked shipments of largely non-oil goods.
The additional costs have not made much difference to most shipping companies so far, because the cost of using the Red Sea is still more affordable than sending goods around Africa. But the situation is worth monitoring as some oil companies such as BP and Equinor shift shipments to the longer route.
Experts said that increased shipping costs would likely increase US crude exports to some European buyers.
“We haven't really seen the disruption to tanker traffic that everyone was anticipating,” said Michelle Wies-Bockman, a shipping analyst at Lloyd's List.
There were an average of 76 tankers loaded with oil and fuel per day in the southern Red Sea and Gulf of Aden in December, the area near Yemen that witnessed the attacks. This number is only two ships below the November average, and just three ships below the average during the first 11 months of 2023, according to data from the Mare Trace ship tracking service.
The competing ship-tracking service Kepler monitored the crossing of 236 ships per day on average in the entire Red Sea and Gulf of Aden region in December, which is slightly more than the daily average of 230 ships in November.
The additional cost of sailing via the Cape of Good Hope route around Africa instead of going through the Red Sea will make oil delivery trips less profitable, Wise Bookman reported.
“So, you will try and you will move forward,” she added.
Charter rates have nearly doubled since the beginning of December, according to data from ship data analysis company Marhelm. The cost of shipping oil on board Suezmax tankers reaches approximately $85,000 per day. These tankers can carry up to one million barrels. The cost of shipping oil on Aframax ships, which can transport 750,000 barrels, is $75,000 per day.
Tanker traffic in the southern Red Sea region declined briefly between December 18 and 22, when the Houthi group intensified its attacks on ships, to an average of 66 tankers, but movement then resumed, according to the Mary Trace ship tracking service.
Container ship traffic in the region declined more sharply by 28 percent in December, compared to November, with sharp declines in the second half of the month due to an escalation in attacks, according to Marie Trace.
Insistence on taking risks
An analysis of data from the London Stock Exchange Group, LSEG, showed that many major oil companies, refineries, and shipping services companies continued to use the Red Sea route.
“Shipping companies and their customers really want to avoid schedule disruptions,” said Calvin Froedig, founder of ship data analytics firm Marhelm. “So they are still taking risks.”
He pointed out that many of the oil tankers crossing the Red Sea were carrying Russian crude to India, which the Houthis have no interest in attacking.
According to ship tracking data at the London Stock Exchange Group, the Delta Poseidon ship, operated by Chevron, crossed the Suez Canal and the Red Sea at the end of December on its way to Singapore.
The ship Sanmar Sarod, operated by Indian refiner Reliance, also crossed the Red Sea in late December to deliver gasoline components to the United States, the data showed.
A Chevron spokesman said, “We will continue to actively evaluate road safety in the Red Sea and throughout the Middle East and make decisions based on the latest developments.”
Reliance did not respond to a request for comment.
Other tankers, chartered by Gunvor Trading's Clearlake unit, Indian refiner Bharat Petroleum and Saudi Aramco Trading, have transited this route in the past few weeks. The companies declined to comment or did not respond to requests for comment.
Using the Red Sea could shave about 3,700 nautical miles from a trip from Singapore to Gibraltar.
Redirection
Some companies such as BP and Equinor have temporarily halted all transit operations through the Red Sea and redirected their ships in the region.
Data from the ship tracking company Forteska indicates that at least 32 tankers have diverted or taken the Cape of Good Hope route instead of using the Suez Canal since the second half of December.
Vortexa added that the tankers being diverted are mostly those chartered by companies that announced the temporary suspension of sailing in the Red Sea, or those operated by American entities or linked to Israel.
Fuel oil traders and bunkerers in Asia said they were still monitoring developments in the Red Sea, although east of Suez was still adequately supplied at present, so current diversions were unlikely to increase prices.
Kpler data indicate that disturbances from east to west have mainly affected European imports of diesel and jet fuel so far.
Meanwhile, west-to-east diversions have affected some European fuel oil and gasoline shipments to the Middle East, Asia-Pacific and East Africa.
Matt Smith, an analyst at ship tracking firm Kpler, said the tension there had also prompted more oil buyers to look to the United States and likely played a role in the record increase in crude oil exports to Europe to 2.3 million barrels per day in December.
Smith added, “The ongoing uncertainty in the Red Sea is likely to motivate some European countries to buy American crude.”
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