BP, Evergreen, Euronav Halt Sailings Through Chaotic Red Sea As Insurers Demand 'War Risk Coverage'
Update:
Add Taiwanese container shipping line Evergreen and Belgian tanker owner Euronav to the growing list of major shipping firms halting all sails through the Red Sea strait. This brings the total to seven.
Also, the UK Navy disclosed more details regarding today's incident in the Red Sea, reporting that an explosion hit the side of a commercial vessel near Yemen. The Norwegian owner of the ship confirmed that an "unidentified object" had impacted the vessel on the port side.
Bloomberg reports:
YEMEN HOUTHIS SAY THEY ATTACKED MSC CLARA CONTAINER SHIP
YEMEN HOUTHIS CLAIM THEY ALSO ATTACKED SWAN ATLANTIC OIL TANKER
Brent crude futures have risen 3% from the lows of $75.81 a barrel since 0515 ET after reports started to trickle in about another incident in the Red Sea and more shippers were halting sailings in the region.
Between 10% and 12% of global trade passes through the Red Sea each year.
Red Sea is now largely closed to traffic. That's 8.8 million bpd of daily oil transit, and nearly 380 million tons of daily cargo transit.
— zerohedge (@zerohedge) December 18, 2023
Global traffic now will be rerouted around Cape of Good Hope, adding 40% to voyage distance (and even more to cost) pic.twitter.com/Xct7x03tFI
And it begins.
Suez update: 46 container ships now have diverted around the Cape of Good Hope rather than transiting the Red Sea. pic.twitter.com/4zaTXn3LO1
— Ryan Petersen (@typesfast) December 18, 2023
All the chaos in the Red Sea has forced London maritime insurers to expand war risk coverage to the area.
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The number of major shipping firms halting all commercial sailings through the highly trafficked Red Sea strait has increased to five from four in response to missile and drone attacks by Yemen's Iran-backed Houthis.
Bloomberg reports that energy giant BP Plc is the latest shipper to pause all tanker sailings through the strategic Bab al-Mandab strait due to Houthi militants.
"In light of the deteriorating security situation for shipping in the Red Sea, BP has decided to temporarily pause all transits through the Red Sea," BP said in a statement.
Besides BP, Maersk, Hapag-Lloyd, CMA CGM, and Mediterranean Shipping Company have all paused commercial vessel operations through the Red Sea that connects to Egypt's Suez Canal.
Spillover risks of the Israel-Hamas war are quickly building, as the Red Sea is responsible for 10% of the world's international trade.
Over the weekend, US Central Command wrote in a post on X that the Burke-class guided-missile destroyer USS Carney shot down 14 Houthi drones in the Red Sea.
On Monday morning, the UK Navy said it received a report of a possible explosion on the water about 30 miles south of Port Mokha, Yemen.
The chaos has caused some shippers to divert vessels around the Cape of Good Hope to avoid the conflict area.
The acceleration of de-globalization is leading to a surge of uncertainty along major global maritime routes.
