Suez Canal blockage leading to oil price spikes

Eudore R. Chand

DUBAI 25 March 2021: A massive cargo ship turned sideways in Egypt’s Suez Canal, blocking traffic in a crucial East-West waterway for global shipping, according to satellite data accessed Wednesday.

Traffic on the narrow waterway dividing continental Africa from the Sinai Peninsula stopped Tuesday after the MV Ever Given, a Panama-flagged container ship with an owner listed in Japan, got stuck.

It wasn’t immediately clear what caused the Ever Given to turn sideways in the canal. GAC, a global shipping and logistics company, described the Ever Given as suffering “a blackout while transiting in a northerly direction,” without elaborating. Others blamed high winds for turning the vessel, said Wam/AP.

The Ever Given’s bow was touching the canal’s eastern wall, while its stern looked lodged against its western wall, according to satellite data from Several tug boats surrounded the ship, likely attempting to push it the right way, the data showed.

Days to weeks to clear

Ranjith Raja, Head of Mena Oil & Shipping Research, at Refinitiv said: “We’ve never seen anything like this before but it’s likely that resulting congestion will take several days to weeks to clear as it is expected to have a ripple effect on the other convoys, schedules and global markets – given the vital importance of the waterway. The benchmark crude prices have already shown a strong upswing on the back of this incident which has closed canal movement for more than a day. Prices have surged by 5% since market opening this morning.

“Our ship tracking data has also found that there were 53 tankers stuck either side of the canal, with about 27 of them carrying an estimated 1.9 million MT of oil cargo – equivalent to almost half of UK’s monthly crude intake. The vessel entered the canal some 45 minutes before it became stuck, moving at 12.8 knots (about 24 kph, 15 mph) just before the crash.

“Typically, a pilot from Egypt’s canal authority would board a ship to guide it through the canal, but the ship’s captain retains ultimate authority for navigation.”

Image courtesy Refinitiv

Featured image was posted to Instagram by a user on another waiting cargo ship showing the Ever Given wedged across the canal.

Canal authorities could not be immediately reached early Wednesday. The ship appeared to be stuck some 6 kilometres (3.7 miles) north of the southernly mouth of the canal near the city of Suez.

Cargo ships and oil tankers appeared to be lining up at the southern end of the Suez Canal, waiting to be able to pass through the waterway to the Mediterranean Sea, according to Marine Traffic data.

A United Nations database listed the Ever Given as being owned by Shoei Kisen KK, a ship-leasing firm based in Imabari, Japan. The firm could not be immediately reached for comment Wednesday. The ship had listed its destination as Rotterdam in the Netherlands prior to getting stuck in the canal.

Evergreen Marine Corp., a major Taiwan-based shipping company, also listed the Ever Given among ships in its fleet and the ship bears its colour scheme and logo.

Evergreen could not immediately be reached for comment, though Taiwan’s state-run Central News Agency quoted unidentified company sources as saying the ship had been overcome by strong winds as it entered the Suez Canal from the Red Sea but none of its containers had sunk.

The Ever Given, built in 2018 with a length of nearly 400 metres (a quarter mile) and a width of 59 metres (193 feet), is among the largest cargo ships in the world.

Opened in 1869, the Suez Canal provides a crucial link for oil, natural gas and cargo being shipping from East to West. Around 10 percent of the world’s trade flows through the waterway and it remains one of Egypt’s top foreign currency earners. In 2015, the government of President Abdel-Fattah el-Sissi completed a major expansion of the canal, allowing it to accommodate the world’s largest vessels.


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