Red Sea attacks dangerous energy tankers but does not stop them

Attacks on commercial ships in the Red Sea by Yemen’s Houthi rebels have left oil tanker operators with an unwelcome calculation: accept the risks of passing through the danger zone, or lose business.

The risks of conflict in the area could even increase, as a coalition of 12 countries led by the United States warned on Wednesday that this “would happen”.hold malicious actors accountable for unlawful seizures and attacks.”

Despite the attacks and the risk of more, some oil companies are insisting that the ships they charter take this route instead of an excursion through Africa, which could require an additional two weeks at a higher cost. Tanker owners “can take it or leave it,” said Henry Curra, head of global research at Braemar, a ship brokerage in London.

Oil markets have largely shrugged off the drone and missile attacks so far. Traders believe there is enough oil available around the world to solve any supply problems.

“Oil and gas supplies are relatively healthy in most major demand centers, so there is a sense that disruptions and delays can be overcome,” said Henning Gloystein, director of energy and climate change at Eurasia Group, a political risk-taking firm. As global economic growth has slowed, demand for oil has also declined.

While some oil companies, including BP, say they are staying out of the area, others continue to use the Red Sea, which provides access to European markets via the Suez Canal.

Lars H. Barstad, CEO of Frontline, a major tanker company in Oslo, said: “If we have the opportunity, we will avoid crossing the Red Sea.” But that is not always possible.

A tanker company, Mr. Barstad said, is just a “taxi service” at the beck and call of customers like major oil companies and trading firms. Once the voyage has begun, the captain or owner cannot simply decide without a very strong reason to go around Africa instead of going through the Suez Canal.

To divert a ship already underway, “there has to be a war situation,” he said. “It is not a war situation right now, although it may look like one to outsiders.”

Mr Barstad said he thought the chances of any of his ships being targeted by drones or missiles were quite low because of the large numbers of ships still passing through the area. Also, he said, his company has no recent history of doing business with Israel, making it less of a target for the Houthis, who are allies of Hamas.

He also finds some comfort in the coalition’s growing naval presence in the area and the armed guards aboard his ships.

General, The flow of oil and refined products such as diesel and gasoline through the Suez Canal fell by about 40 percent in December compared to October, said Viktor Katona, an analyst at shipping tracking company Kpler.

The petroleum industry is gradually adapting to the increased dangers. Some tankers sail around Africa. Others bring cargoes to Asia. A surge in U.S. exports of diesel fuel and other refined products is helping Europe offset reduced flows from India and the Middle East.

That fairly smooth shift is one reason the Houthis threat has had so little impact on energy prices. The price of Brent oil, now about $77 a barrel, is slightly lower than when Hamas fighters invaded Israel on October 7, starting the war in Gaza. At the same time, European natural gas prices have also fallen substantially.

While the Suez Canal may be important, there are alternatives. The largest crude oil tankers have always tended to stay away from the canal due to their massiveness, so the current situation does not represent much change. While the owners of some liquefied natural gas ships have decided to temporarily keep their ships out of the Suez Canal, those from Qatar, a major supplier to Europe, have continued to use the Egyptian route, perhaps assuming that the Houthis are not targeting a shipowner will direct. close to Hamas. As a result, European natural gas prices have been “even more depressed by a mild winter so far,” said Laura Page, liquefied natural gas analyst at Kpler.

Shipping industry insiders believe Russia, which sends large quantities of oil through the canal, is also likely immune to attack. “Given Russia’s relations with Iran, it is very unlikely that they will be targeted,” said Jonathan Chappell, senior managing director for surface and maritime transport equities at Evercore ISI, an investment bank in New York.

Above all, what has helped prevent panic is the sense in the markets that the world has sufficient oil and natural gas.

“The market is not concerned about supply risks,” said Richard Bronze, head of geopolitics at research firm Energy Aspects. “It will take a lot to restore a sustainable rally in oil prices,” he added.