The Suez Canal, which connects markets from Europe to Asia, sends ripples through the energy industry as a giant container gets stuck in the canal.
The 120-mile canal, the connecting point of the Red Sea with the Mediterranean, is also the transit point for crude oil from the Black Sea and North African ports and oil products refined Europe.
This tricky logistics challenge involves dislodging the Ever Given, a huge vessel sailing from China to Rotterdam and now stuck sideways, blocking all the traffic on one of the world’s busiest shipping routes. The vessel got stuck in a dust storm when wind speeds reached 40 knots, which has caused over 100 ships to wait to transit.
In an already tight shipping market, the international oil prices have soared up more than 3% and resulted in extra costs and delays. The alternative route—the Cape of Good Hope around Africa would invite delay by more than 2 weeks and expensive freight costs up to $450,000 to the voyage.
According to reports, the cost of renting tankers to traverse from the Middle East to Asia has reached $2.2 million in the last 3 days.
