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Suez Canal blockage lifts oil prices

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The shortest shipping route from Europe to Asia remains blocked as tug boats struggle to free one of the world’s largest container ships after it ran aground in the Suez Canal, prompting a rise in oil prices due to supply delays.

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The 400-metre, 224,000-tonne vessel ran aground on Tuesday morning after losing the ability to steer amid high winds and a dust storm, the Suez Canal Authority (SCA) said in a statement.

About 30 per cent of global container shipping volumes pass through the canal each day, carrying everything from fuel to consumer goods. The main alternative route for ships travelling between Asia and Europe, around the African cape, takes a week longer to navigate.

GAC, a Dubai-based marine services company, said authorities were still working to free the ship mid-afternoon on Wednesday, and that information it had received earlier claiming the vessel was partially refloated was inaccurate.

Images posted by the SCA appeared to show the ship positioned diagonally across the canal, blocking its full width, as tugs tried to dislodge it. Photos showed a digger removing earth and rock from the bank of the canal around the ship’s bow.

An official said work to release the ship could continue into the night, weather permitting.

The SCA’s chairman told local media that despite the blockage, a southbound convoy was on the move and that the authority was trying to keep traffic flowing between waiting areas as best it could while salvage efforts continued.

“Once we get this boat out, then that’s it, things will go back to normal. God willing, we’ll be done today,” Chairman Osama Rabie said. The authority was considering compensation for delayed ships, he said.

About 12 per cent of world trade by volume passes through the canal, and it is a major source of hard currency for Egypt, generating $5.6 billion in 2020.

At least 30 ships were blocked to the north of the Ever Given, and three to the south, local sources said. Several dozen ships – some carrying crude oil, liquefied natural gas and retail goods – could also be seen grouped around the northern and southern entrances to the canal.

Oil analytics firm Vortexa said ten tankers carrying 13 million barrels of crude could be affected. Oil prices have risen more than two per cent.

If the ship remained stuck for up to 48 hours, “the impact will be limited to a gradual worsening of already very bad vessel delays”, said Niels Madsen, VP of Product and Operations at Denmark-based Sea-Intelligence.

“If on the other hand, the Suez Canal remains blocked for another 3-5 days, then this will start to have very serious global ramifications,” he said.

-with AAP

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