BP interrupts oil shipments via the Red Sea for fear of attacks
Global oil prices rose on Monday after energy giant BP said it had stopped sending tankers through the Red Sea, a crucial shipping lane that has become an increasingly dangerous route due to drone and missile attacks on merchant ships launched by Yemen’s armed Houthi group .
BP’s announcement raised fears of further disruption to shipments through the Suez Canal, a key conduit for both crude and refined oil products.
The Houthis, who control much of northern Yemen, have been carrying out attacks on ships in the region since the Hamas-led attacks on Israel on October 7. They have threatened all ships owned and operated by Israel, as well as any ship bound for Israeli ports. Both the Houthis and Hamas, who control Gaza, are supported by Iran.
“BP has decided to temporarily suspend all transit through the Red Sea,” the company said in a statement, citing “the deteriorating security situation for shipping.”
Over the weekend, military forces from the United States and other countries said they had shot down more than a dozen drones in the area.
Brent oil, the international oil benchmark, rose more than 3 percent in trading on Monday.
As the Red Sea has become a flashpoint, major shipping companies – including Evergreen, Hapag-Lloyd, Maersk and Mediterranean Shipping – said in recent days they would temporarily stop sending ships through the area.
A major risk is that, if attacks on shipping continue, oil companies and other shippers will stop using the Suez Canal for an extended period of time. Such a change could disrupt the flow of oil from countries such as Saudi Arabia and Iraq, where BP operates a major oil field, to Europe and elsewhere.
Tankers en route from the Persian Gulf region regularly travel through the Red Sea to reach the Suez Canal, which serves as a passage to the Mediterranean Sea. Ships from Saudi Arabia also unload crude oil into a pipeline called the SUMED, which runs from Ain Sokhna, a port and storage area south of Suez, to a terminal near the Egyptian city of Alexandria.
Viktor Katona, an analyst at Kpler, a company that tracks commodity movements, said the amount of oil and oil products flowing through the Suez Canal has already fallen sharply this month, to about a third of usual flows.
If the delay continues, he said, tankers will have to take the much longer route around the Cape of Good Hope in Africa. In that case, tankers would not only consume more fuel during transportation, but freight rates and insurance premiums would most likely increase, raising costs for consumers.
“The pressure is building up in the system,” he said.