Benoit Faucon and Jenny Strasburg, WSJ
EnergiesNet.com 01 19 18 2024
British oil major suspended all shipments through the Red Sea after U.S. and U.K. strikes on Yemen’s Houthi rebels triggered fears of further escalation, according to people familiar with the decision.
The West’s targeting of the Iranian-ally militia came after the Houthis launched dozens of missiles and drones at commercial vessels around the Red Sea and the nearby Bab el-Mandeb. The militia has said the attacks are in response to an Israeli offensive in the Gaza Strip.
Around 12% of total global seaborne oil trade goes through the Red Sea.
Last month, a tanker chartered by Shell to move Indian jet fuel was targeted by a drone in the Red Sea and harassed by Houthi boats, according to shipping officials.
The company last week took the step to halt all crossings over concerns that a successful attack could trigger a massive spill in the region, as well as present risks to the safety of crews on the ships, the people said.
Speaking at a Wall Street Journal event on Tuesday at the World Economic Forum in Davos, Switzerland, Shell CEO Wael Sawan said “the priority is the welfare of our people and of course protecting our assets. That’s how we have been looking at this from the beginning.”
The Red Sea disruptions complicate energy distribution and raise prices, Sawan said, and take “an extra couple of weeks” to move cargoes. The impact has been a 5%-to-10% bump in costs of delivery, because of extra travel and added complexities in booking ships.
Shell’s teams are monitoring the situation throughout each day, he said.
“This is the reaction to what is still a short-lived reality,” he said. “We’ll have to see whether this becomes a longer-standing issue.”
Shell joins other global shippers in deciding to avoid the Red Sea, including other energy companies.
The Gulf country, which has acted as a mediator for the Houthis in the past, halted the use of the Red Sea route for its liquefied-natural-gas exports for fear of being caught in the conflict, according to a Qatari energy official and shipping trackers.
Recent Houthi attacks, initially directed against Israeli-linked vessels, have rattled global markets, upended international shipping routes and become increasingly indiscriminate. The rebels have attacked vessels from containerships to tankers moving sanctioned Russian oil, as the global shipping nexus complicates their ability to identify specific targets.
They vowed again Monday to continue their campaign against U.S. and international targets in the region in response to Israel’s actions in Gaza. “Anyone attempting to hinder us from doing so will fail,” a Houthi official said Monday.
Tanker owners said after the U.S.-led strike that a number of captains of chartered vessels heading for Europe via the Suez Canal have refused to enter the Red Sea, forcing them to sail through a lengthy route around Southern Africa. The Singapore ship registry and Intertanko, an industry lobby group, said that the waterway should be avoided.
A Malta-flagged bulk carrier was attacked twice on Tuesday morning in the Red Sea about 100 nautical miles from the Yemeni coastline, said Christopher Long, intelligence director at U.K. maritime security consultancy Neptune P2P Group.
The Greek-owned vessel, the Zografia, which was sailing from Vietnam to the Suez Canal, was fired upon by gunmen on small boats and then hit by a missile, Long said.
The Houthis later confirmed the missile attack and said the vessel was headed to Israel.
An official at the vessel’s manager, Vulcanus Technical Maritime Enterprise, confirmed the vessel had been attacked but declined to comment further.