Oil and natural gas giant BP has joined the growing list of companies that have halted their shipments through the Red Sea because of the risk of attack from Yemen's Houthi rebels, threatening a major trade route in what is expected to have global effects.
London-based BP said Monday that it has “decided to temporarily pause all transits through the Red Sea,” including shipments of oil, liquid natural gas and other energy supplies. Describing it as a “precautionary pause," the company said the decision was under ongoing review but that it was prioritizing crew safety.
Oil prices rose Monday partly over market nerves about attacks by the Iranian-backed Houthis, which have targeted container ships and oil tankers passing through a narrow waterway that separates Yemen from East Africa and leads north to the Red Sea and Suez Canal, where an estimated 10% of the world’s trade passes through.
The Houthis have targeted Israeli-linked vessels during Israel's war with Hamas but escalated their attacks last week, hitting or just missing ships without clear ties.
In the past few days, four of the five world's largest container shipping companies have paused or rerouted movements through the Red Sea. Maersk, MSC, CMA CGM Group and Hapag-Lloyd are leaders in alliances that move basically all consumer goods between Asia and Europe, so “virtually all services will have to make this rerouting,” said Simon Heaney, senior manager of container research for Drewry, a maritime research consultancy.
Ships will have to go around the Cape of Good Hope at the bottom of Africa instead, adding days to voyages.
Depending on what companies decide to do, they will have to add more ships to make up the extra time, burn more fuel for the longer journey and if they decide to go faster to meet their itineraries, and that would release more carbon dioxide, Heaney said.
Goods bound for stores for Christmas will have already been delivered, he said, but online orders could see delays.
“The impact will be longer transit times, more fuel spent, more ships required, potential disruption and delays, at least in the first arrivals in Europe,” he said.
That brings up the cost of shipping, but “I don’t think it’s going to go to the heights that it reached during the pandemic,” Heaney said.
Supply chain disruptions as the global economy rebounded from COVID-19 pandemic helped drive up consumer prices for people around the world.
