While Egypt struggles with the Suez Canal crisis, major gulf markets thrive from it
Since Ever Given’s choking the Suez Canal, the number of stranded vessels peaked at 237 over the weekend. There were 89 ships at Port Said awaiting a southbound convoy, 41 ships at the Great Bitter lakes waiting to continue their transit and 107 ships at Suez waiting for a northbound convoy.
The count spiked sharply soon after. The Suez Canal Authority (SCA) chairman, Osama Rabie announced on Sunday the authority is considering discounts for affected vessels, adding the canal loses up to $14 million in daily revenue, with a whopping 369 vessels were waiting to transit. SCA deployed two dredgers to free the container ship, along with eight tugs on site. The authority also expressed gratitude for international offers of assistance to resolve the blockage.
Reroutes may hike rates
Claire Grierson, senior director of Tanker Research at SSY said while the impact on the VLCC market had been minimal, it would be more problematic if the Ever Given remains grounded. “It is having more of an impact on the Suezmax sector where rates are rising, and a lengthy blockage will swiftly affect vessel supply balances. Some vessels in this segment ballast northward through the Suez Canal, after completing voyages in the East, to lift cargoes from the Black Sea or the Mediterranean to go to Asia again. Hence, a sustained canal disruption would have a significant impact on this voyage chain,” she said.
Taking into view rerouting as the alternative which will add 20 days to the voyage time, Grierson feels longer voyages will soak up vessel supply and support rates. “If the canal disruption prolongs, the rerouting of tankers around the Cape of Good Hope will increase voyage times greatly, affecting vessel supply replenishment for some regions. This will boost freight rates at a time when many tanker segments have been struggling. If replacement vessels are needed, this will also cause the rates to jump,” she noted.
Gulf markets thrive
Major stock markets in the Gulf ended higher on Sunday, as investors shrugged off the Suez Canal blockage on hopes for a global economic recovery. Oil prices, a key catalyst for the Gulf region’s financial shares, rose more than 4 per cent last Friday from disruption worries on global supplies of crude and refined products as efforts to dislodge the vessel are in progress.
Saudi Arabia’s benchmark index advanced 0.7 per cent, with petrochemical maker Saudi Basic Industries climbing 1.9 per cent and Saudi Telecom Company closing 2.3 per cent higher. Ratings agency S&P Global last week affirmed Saudi Arabia’s ‘A-/A-2’ ratings with a stable outlook, forecasting that its economy will return to positive growth in 2021. Gulf Navigation, maritime and shipping firm, gained over 2 per cent.