Amid recent attacks on commercial vessels by Yemen’s Houthi rebels, the Suez Canal and the Red Sea are witnessing a substantial drop in global oil and petroleum product flows, according to ship tracking data. Viktor Katona, lead crude analyst at commodity market analytics firm Kpler, notes a more than 50% decline in flows through the Suez Canal in December, attributing it to major shipping companies avoiding the route due to security concerns.
Although global oil shipments have been significantly impacted, oil supplies to India remain relatively stable. The article explains that India’s West Asian crude oil imports, a substantial portion of its supply, don’t rely on the Suez Canal route. Furthermore, tankers carrying Russian oil, a key contributor to India’s oil imports, appear to be unaffected by the Houthi threat.
The recent attacks by Houthi rebels near the Bab-al-Mandeb strait, a critical passage to the Red Sea and Suez Canal, have intensified concerns about the security of this vital global trade route. The attacks, allegedly targeting vessels with links to Israel due to its military offensive in Gaza, have prompted many shipping companies to opt for alternative routes, circumventing the Suez Canal.
Prior to December, the Suez Canal and the Red Sea accounted for a significant share of global crude oil and petroleum product flows. However, the ongoing security issues have led major shipping companies to choose longer routes around the African continent, impacting the share of flows passing through the Suez Canal.
Despite the disruptions, the article reassures that oil shipments to India are expected to face minimal impact. Most of India’s crucial oil imports from key West Asian suppliers, including Iraq, Saudi Arabia, and the UAE, predominantly use the Strait of Hormuz, not the Suez Canal route.
The situation has also prompted a shift in international oil shipping, with companies opting for routes around the Cape of Good Hope. Although this has caused some upward pressure on oil prices due to increased transportation costs, the overall impact on global oil production and availability is deemed limited.
As for Russia, a key oil supplier to India, the article emphasizes that tankers carrying Russian oil have not been targeted by Houthi rebels. This observation aligns with the perception that Russia is considered an ally of Iran, whereas the rebels are believed to be backed by Tehran.
In conclusion, while global oil flows face a significant challenge due to heightened security concerns in the Suez Canal, the article suggests that India’s crude oil supply remains relatively secure, and international oil prices are not expected to be severely impacted by the disruptions.