- First Crude Shipments Transit Suez Canal After Israel-Hamas Ceasefire.
- South Korean Refiner Receives Regular Shipments Despite Security Concerns.
- Lingering Security Fears Impact Mediterranean Crude Imports to Asia.
In a report by S&P Global Commodities at Sea and market participants on January 23, oil tanker transits through the Suez Canal are picking up gradually since the Israel-Hamas ceasefire agreement. The Suez Canal will return to normal operational levels sooner rather than later, with more frequent tanker transits expected in the coming weeks, reports S&P Global.
First Tanker Transits through Suez Canal Since Ceasefire Agreement
One of the first vessels passing through the Suez Canal since the ceasefire was the Neptune I, which was bound for Singapore. It was a Panama-flagged Aframax tanker that Greece’s Sea Trade Marine runs. The tanker should have arrived at Singapore on 8 February when sailing south of the Gulf of Suez. Another vessel was Rayyan Gas, an LPG carrier heading for the UAE. The VLCC Ghazal was also known to have safely crossed the canal en route to South Korea.
South Korean Refiner Sees Regular Shipments
“It’s nothing out of the ordinary … A regular light sour crude supply from the parent company Aramco,” commented a feedstock management source at South Korean refiner S-Oil, which operates multiple crude distillation units in Onsan. Despite the increased traffic, some Asian refiners remain cautious about importing Mediterranean crudes, particularly CPC Blend, due to lingering security concerns and the higher shipping insurance costs associated with the Red Sea route.
Ongoing Security Concerns Despite Ceasefire
Despite the ceasefire, concerns regarding possible attacks on ships remain at a high level, especially in the Red Sea and Bab al-Mandab Strait, areas that are still considered high-risk by Lloyd’s Joint War Committee. This keeps cargo insurance premiums at high levels, though slowly improving since the Houthi rebels agreed to halt attacks on most ships transiting the Red Sea.
Crude Imports from the Mediterranean Declining
With further heightened security measures, imports into South Korea are down 63% for this level of CPC Blend crude for half of 2024 versus a year ago. A similar shun is evident in Thai refineries. Higher transport costs through passage south of the African continent through the Cape of Good Hope have become the economic killer on this route for them.
Positive Sentiment and Falling Freight Rates
Freight rates have dropped dramatically following the signing of the ceasefire agreement. The trend reflects increasing confidence in the safety of transiting the Suez Canal. The passing of oil tankers through the canal will be on the rise, with many more expected to do so in the coming weeks. The Red Sea and Bab al-Mandab Strait are, however, high-risk areas, which continue to be on the list of Lloyd’s Joint War Committee.
Reduced Oil and LNG Ship Transits through the Red Sea
Oil transits through the Bab al-Mandab Strait and the Suez Canal have declined dramatically from 2023 to 2024. Oil transit through Bab al-Mandab Strait has declined to 2.5 million b/d from 6.9 million b/d, while Suez Canal oil transits have declined to 3.9 million b/d from 7.9 million b/d. LNG ship transit through the Red Sea and Suez Canal has been halted for more than a year due to ongoing attacks on merchant ships.
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Source: S&P Global
