BY YAWEN CHEN
LONDON- US Central Command forces struck a Houthi anti-ship missile that was aimed into the Gulf of Aden and prepared to launch, the US military said in a statement on X, formerly known as Twitter. A spokesperson for the Houthis had announced on Jan. 15 that the militant group will expand its targets in the Red Sea region to include US ships, as it vowed to keep up attacks after US and British strikes on its sites in Yemen.
Russia shipped a record 107 million metric tons of crude oil to China in 2023, 24 percent higher than in 2022 and equivalent to 2 million barrels per day (bpd), China’s customs data showed on Jan. 20. Meanwhile, crude oil exports to China from Saudi Arabia, previously China’s largest supplier, fell 2 percent year-on-year to 86 million tons.
Russian energy company Novatek said on Jan. 21 that it had been forced to suspend some operations at a huge Baltic Sea fuel export terminal due to a fire started by what Ukrainian media said was a drone attack, Reuters reported.
The Red Sea’s shipping strife is spreading. Up until mid-January, the huge ships that transport 12 percent of the global oil trade by sea had largely kept crossing the Suez Canal even as attacks by Yemen’s Houthi militants scared most merchant container ships away. That’s now changing, in a way that may sow discord in one of the global oil market’s more enduring alliances: Russia and Saudi Arabia.
As major logistics groups like Maersk Hapag-Lloyd and Mediterranean Shipping Company (MSC) said they would reroute traffic around Africa, the daily container capacity of ships in the Red Sea and Suez Canal area had fallen to just one-third of normal levels as of Jan. 1, according to the Kiel Institute. Since then, strikes led by the US and UK in Yemen, and Houthi counter-strikes, have prompted oil majors like Shell to reroute. The number of tankers in the canal fell over 50 percent in the week starting Jan. 15 compared to the previous week, according to shipping data provider AXSMarine.
As with the impact of the attacks on non-oil trade, the upshot of all this on global prices is complex. Freight rates for tankers have risen by 30 percent since mid-December, but weak economic growth and a global surfeit of oil supply over demand may also dampen the inflationary impact of a blockage. What’s clearer is the impact on those exporters who are heavy users of the Suez Canal — like Russia.
Ever since the Ukraine war erupted in February 2022, cheap Russian crude oil has increasingly dominated flows headed east to China and India, the world’s top oil consumers, who have not sanctioned Russian supplies. Oil shipments from Russia accounted for around 75 percent of southbound Suez Canal oil traffic in the first half of 2023, most of which were destined for India and China, according to S&P Global Ratings research.
