Despite Houthi attacks, oil tankers continue to traverse the Red Sea

Despite attacks by Iran-allied Houthi fighters affecting container ships, oil and fuel tanker traffic in the Red Sea remained stable in December, as revealed by ship tracking data. The attacks have led to increased transportation costs and insurance premiums, and while they have not affected oil flows as much as feared, some oil majors like BP and Equinor are diverting their cargoes to longer routes. Despite increased costs, the Red Sea remains cheaper than transporting cargo through Africa, but increased transportation costs are expected to boost U.S. crude exports to some European buyers.

The average number of tankers carrying oil and fuel in the southern Red Sea and Gulf of Aden remained relatively steady in December, with a temporary decrease in tanker traffic between December 18 and 22 due to increased attacks by the Houthi group. Despite the risks, major oil companies, refineries, and trading houses continue to use the Red Sea route, while some companies like BP and Equinor have suspended all transits through the Red Sea and rerouted their ships in the region.

The disruptions have led to more oil buyers looking to the U.S., with record crude exports to Europe in December. Uncertainty in the Red Sea is likely to result in increased European purchases of U.S. crude oil. Fuel oil traders and bunkering sources in Asia are continuing to monitor developments in the Red Sea, while current diversions are unlikely to drive up prices due to ample supply in the eastern Suez.

Source .