Oil prices retreated in Thursday’s trading after Israel and Hamas reached a Gaza ceasefire and hostage release deal following 15 months of war. According rto Qatari Prime Minister Sheikh Mohammed bin Abdul Rahman Al Thani, the agreement will come into effect on Sunday if approved by the Israeli cabinet.  

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Maritime security officials now expect the Houthi militia to announce ahalt in attacks on ships in the Red Sea. Since the beginning of the Middle East war, Houthi rebels in Yemen significantly stepped up attacks on commercial shipping vessels in-transit via the lower Red Sea in retaliation for Israel’s war on Hamas in the Gaza Strip, increasing the risk for ships passing through the Suez Canal. The Red Sea is one of the world’s most densely packed shipping channels and the most significant waterway connecting Europe to Asia and east Africa. About 12% of global trade, including 30% of global container traffic, passes through the Red Sea, meaning that delays there can potentially affect fuel prices as well as the availability of various commodities and electronics. Dozens of companies halted shipping in the Red Sea and at the Suez canal. Four of the world’s five largest container-shipping companies, namely Maersk, Hapag-Lloyd, CMA, CGM and MSC, also paused or suspended their services in the Red Sea, the route through which traffic from the Suez Canal must pass. 

The Suez Canal is one of the most important channels of the global oil trade. Northbound traffic worth ~3.9 million bpd is dominated by crude oil from Middle East producers to Europe and also middle distillates from India and the Middle East. Southbound traffic, estimated at 2.9 million bpd, comprises crude flows mainly from Russia to Asian customers, and also refined products naphtha and fuel oil.  The United States, Qatar and Russia are the leading shippers of LNG via Suez.

By Alex Kimani for Oilprice.com

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