BP decided Monday to stop sending shipments through the Red Sea, the latest company move to avoid the key trade route following attacks from Houthi militants. Shipping stocks along with U.S. crude and natural gas prices edged higher Monday.
The U. K-based oil major cited the "deteriorating security situation for shipping in the Red Sea" as its reason to temporarily pause all transit through the waterway, according to a statement to Bloomberg Monday. The Red Sea allows oil originating in the Persian Gulf access to the Mediterranean and Atlantic sea lanes, via the Suez Canal. BP stock advanced 0.9% to 35.13 Tuesday during market action.
The move by BP follows the decision by AP Moller-Maersk, which operates the world's second-largest container shipping fleet, on Friday to halt all of its Red Sea traffic due to attacks last week attributed to the Yemen-based militant group. The Iran-backed Houthi militants have declared support for Hamas in the aftermath of the Oct. 7 terrorist attack on Israel and the ensuing war. The Houthis have threatened to target ships traveling to Israel and have stepped up actions against vessels in recent weeks.
Shipping Stocks Rally On Red Sea Concerns
U.S. crude oil gained 1.6%, moving to nearly $73 per barrel Monday after its recent pullback. Meanwhile, U.S. natural gas futures also advanced 0.5% to more than $2.50 per British thermal unit. Natural gas had traded above $3.80 per Btu in early November.
Shipping stocks Scorpio Tankers and Frontline surged 2.6% and 2.5%, respectively Monday. Both STNG and FRO sit on the Russell 2000 index. Fellow shipping stock Dorian LPG advanced 2%.
Meanwhile, non-energy shipping stocks ZIM Integrated Shipping and Golden Ocean Group gained ground Monday after recent losses.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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