British energy giant announces temporary suspension of all crude shipments through waterway due to attacks in Red Sea
Date
12/19/2023 5:47:42 AM
(MENAFN) In response to a series of recent attacks in the Red Sea region, British energy giant BP has announced the temporary suspension of all crude shipments through the strategic waterway.
This decision aligns with other major freight companies that have taken similar measures due to heightened security concerns. The attacks, attributed to Yemen-based Houthi rebels, have targeted ships passing through the region, particularly those believed to be en route to Israel.
BP, in a statement released on Monday, cited the "deteriorating security situation" as the primary reason for the suspension. The company emphasized its commitment to prioritizing the safety and security of its personnel and those working on its behalf. The decision will be subject to ongoing review, contingent on the evolving circumstances in the region.
The move by BP adds to the growing list of shipping companies that have temporarily halted travel through the southern entrance to the Red Sea, known as the Bab el-Mandeb Strait. This vital waterway connects the Red Sea to the Gulf of Aden and, subsequently, to the Indian Ocean on one side, and the Mediterranean Sea via the Suez Canal on the other. It serves as a critical route facilitating approximately 12 percent of global trade, including 30 percent of all global container shipments, making any disruptions a cause for global concern.
Industry experts have raised alarms over the potential ramifications of these disruptions, warning that crude prices in Europe and the Mediterranean could experience a significant surge if more major oil companies follow suit. Gregory Brew, an oil historian and analyst at Eurasia Group, cautioned that the impact on prices remains uncertain, but if shipping companies continue to divert their traffic and the disruption persists, prices are likely to climb further.
The situation in the Red Sea underscores the delicate balance between global trade, geopolitical tensions, and the energy sector. As companies assess the evolving risks, the temporary suspension of crude shipments raises questions about the resilience of supply chains and the potential economic consequences of prolonged disruptions in this crucial maritime corridor. The coming weeks will be pivotal as industry players closely monitor developments in the region and their implications for the energy market and broader global trade dynamics.
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