Suez Canal disruption doubles the cost of transporting oil

Oil prices rose more than 4% on Friday amid fears that the float of a stranded giant tank container hampering shipping flow through the Suez Canal could take weeks, which could put pressure on supplies of crude and refined products.

This is a rebound from a sharp decline in the previous session, amid fears that demand may be affected by new lockdowns linked to the Corona virus in Europe.

On Friday, Brent rose $ 2.62, or 4.2%, to hit the settlement price of $ 64.57 per barrel, after falling 3.8% on Thursday. U.S. West Texas Intermediate crude rose $ 2.41, or 4.1%, to $ 60.97 a barrel, after falling 4.3% on Thursday.

Brent rose 0.1% over the past week, while West Texas Intermediate fell 0.7%, its third consecutive weekly loss.

The oil market has seen volatility this week, as investors assess the potential impact of the Suez Canal congestion that began last Tuesday and new coronavirus-related lockdowns.

Paula Rodriguez Maceo, vice president of petroleum markets at Rystad Energy, said: “The market is on the rise again with the change in attitude of the concessionaires, considering that the impact of the closure of the Suez Canal on the flows tankers and delivery of supplies are higher than previously expected.

Today, the Suez Canal has stepped up its efforts to free the giant delinquent ship after previous efforts failed. Efforts to free them could take weeks, with unstable weather conditions potentially causing complications.

Of the 39.2 million barrels per day of total crude oil imported by sea in 2020, 1.74 million barrels per day used the channel, according to Kepler to track the movements of tankers.

In addition, Kepler said, just under 9% or 1.54 million barrels per day of global imports of refined products passed through the Suez Canal.

Kepler said today that 10 ships waiting at entry points to the canal are diverting around 10 million barrels of oil.

The Suez Canal shutdown is causing unrest, leading to the near doubling of the costs of transporting oil tankers this week and the hijacking of several ships in the waterway.

Oil markets were also boosted amid fears of escalating geopolitical tensions in the Middle East. Prices are supported by expectations that the Organization of the Petroleum Exporting Countries (OPEC) and its allies will keep production low.

Goldman Sachs said it expects OPEC + to keep production levels unchanged for May when the group meets next week.

Several sources said the Abu Dhabi National Oil Company (ADNOC) stepped up cuts in crude oil supplies to Asian customers in June to between 10% and 15%, from 5% to 15% in May, a week before the OPEC + meeting. In the United States, data from Baker Hughes Energy Services showed the number of operating oil rigs increased by six this week, to 324.