BP has announced the temporary suspension of all oil shipments through the Red Sea in response to a series of attacks by Houthi rebels. The oil giant attributed this decision to the “deteriorating security situation” in the region, as Houthi rebels continue to target vessels they suspect are headed for Israel.
The Red Sea serves as a crucial route for oil, fuel, and consumer goods shipments globally. Several freight firms have already halted their journeys due to the ongoing attacks.
On Monday, Evergreen Line, one of the world’s largest shipping firms, declared that it would no longer carry Israeli cargo via the Red Sea, citing concerns for the safety of ships and crew. The company instructed its container ships to suspend navigation through the Red Sea until further notice.
The Houthi rebels, backed by Iran, have been targeting ships passing through the Bab al-Mandab Strait, also known as the Gate of Tears. This narrow channel, notorious for its navigational challenges, is a key passage for ships traveling between Yemen, Djibouti, Eritrea, and the Suez Canal.
The rebels have explicitly expressed support for Hamas and claimed to be targeting vessels bound for Israel, using drones and rockets against foreign-owned ships. However, it remains uncertain if all the attacked ships were indeed destined for Israel.
The most recent reported attack involved the MT Swan Atlantic, hit by an “unidentified object” off Yemen’s coast. Despite having no links to Israel, the attack raises concerns about the indiscriminate nature of the assaults.
In response to the escalating situation, BP emphasized that the safety and security of personnel and those working on its behalf are its top priorities. The company stated that it would continually review the decision to pause shipments based on evolving circumstances in the region.
Analysts suggest that if other major oil companies follow suit, there could be an impact on crude prices in Europe and the Mediterranean. Currently, Brent crude, the international oil price benchmark, has edged up to $77.17 per barrel.
As attacks on ships intensify, shipping companies are diverting their vessels from the Red Sea. Maersk, MSC, CMA-CGM, and Inventor Chemical Tankers are among the firms redirecting their routes, with some opting for the longer journey around southern Africa.
The shipping industry anticipes various consequences, including delays, increased insurance premiums, and potential disruptions in the supply chain. Despite the challenges, industry experts note that the sector is better equipped to handle crises compared to the Suez Canal blockage in 2021, thanks to improved conditions in the wake of COVID-19-related supply chain issues.
Gary P Hernal started college at UP Diliman and received his BA in Economics from San Sebastian College, Manila, and Masters in Information Systems Management from Keller Graduate School of Management of DeVry University in Oak Brook, IL. He has 25 years of copy editing and management experience at Thomson West, a subsidiary of Thomson Reuters.
