British Petroleum (BP) has announced the suspension of all its tanker movements through the Red Sea as of Monday, following the escalation of Houthi attacks on commercial vessels in the region.
In a statement reported by Bloomberg, the company cited, "In light of the deteriorating security situation for shipping in the Red Sea, British Petroleum has decided to temporarily halt all transit operations through the Red Sea."
The statement further emphasized that "the safety and security of our employees and those working on our behalf remain a top priority for British Petroleum."
Amidst these developments, the price of Brent crude oil increased by 0.68% to $77.07 a barrel, while the price of West Texas Intermediate crude rose by 0.63% to $71.9 a barrel at the time of reporting.
Evergreen, another shipping company, also announced the immediate cessation of accepting Israeli cargoes and instructed its container vessels to suspend navigation through the Red Sea until further notice. The company’s statement revealed that ships currently serving ports of the Red Sea will sail to nearby safe waters and wait for further notice. Meanwhile, container ships scheduled to transit through the Red Sea will be rerouted around the Cape of Good Hope to continue their journeys to ports.
Since November 19, 55 vessels have diverted their route around the Cape of Good Hope, circumventing the African continent to avoid passing through the Red Sea. This shift was due to the increased Houthi attacks on ships heading to Israel, according to the Chairman of the Suez Canal Authority, Osama Rabie.
The Houthis had captured the cargo ship "Galaxy Leader," owned by an Israeli businessman, on November 19 in the Red Sea and directed it to the Yemeni coast.
The group has frequently threatened to target vessels owned or operated by Israeli companies, expressing solidarity with Palestine, particularly against the backdrop of the Israel-Gaza conflict. They have advised nations to evacuate their citizens working on these vessels.
Several attacks attributed to the Houthi group have prompted multiple container shipping companies to suspend their Red Sea operations until further notice.
Among these companies are three of the world's leading container shipping firms: MSC, Maersk, and CMA CGM.
German shipping company Hapag-Lloyd had reported on the previous Friday that it was considering halting passage through the Red Sea, hours after one of its vessels was attacked near Yemen.
Shipping Costs
Reuters sources indicated that shipping costs through the Red Sea are climbing amid the escalation, with concerns growing over potential disruptions to global supply chains traversing the area.
Former Royal Navy Vice Admiral Duncan Potts, who previously commanded maritime security in the Gulf, expressed that the Houthi attacks hold the potential to become a much more significant global economic threat than just a regional geopolitical issue.
The London insurance market has classified the southern Red Sea as a high-risk area. Ships are required to notify their insurance companies when sailing through these areas and typically pay an additional premium for a coverage period of seven days.
War risk premiums have increased in the past week, ranging between 0.1 and 0.15% to 0.2% of the ship's value compared to 0.07% in the preceding week.
Goods coming from south of the Suez Canal, traversing the Bab-el-Mandeb Strait, account for about 47% of the cargo traffic through the Suez Canal, according to the Suez Canal Authority's statistics.
Moreover, approximately 98% of cargo and ships from south of the Suez Canal in Egypt pass through the Bab-el-Mandeb Strait in Yemen.
