Against the backdrop of geopolitical tensions proving a deterrent, Asian oil refiners, including major players from India (like Reliance Industries), have been looking at alternative routes to maintain feedstock supplies.
According to reports, most of them are avoiding the Red Sea and diverting their ships via the Cape of Good Hope in the southern tip of Africa. This is following the continued tension in the Suez Canal following attacks on ships by the Yemen-based Houthi terrorists.
The S&P Global Commodities at Sea data showed that Indian refiner Reliance, a key diesel/gasoil supplier to Europe, had loaded no product for export to the continent in the first two weeks of January, while Abu Dhabi state-owned Abu Dhabi National Oil Company’s (ADNOC) voyages through the Red Sea have ground to a halt in recent days.
More companies have joined the ranks of oil producers avoiding the Red Sea. Shell, the ADNOC and Reliance Industries are among those seen taking precautions amid escalating security risks, according to S&P Global.
According to those closely tracking Reliance for exports, the company does not charter ships. It is done by buyers. In some instances the buyers have decided to re-route it around the Cape of Good Hope.
According to S&P, around 260 commercial ships were transiting or were underway in the Red Sea and Suez Canal waterways on Friday of which 114 were crude, products, chemicals, LNG and LPG tankers, according to CAS, slightly higher than levels seen on January 15. More than 290 commercial ships, of which 176 were tankers, were seen transiting the morning after the first US-led strikes on Houthi targets in Yemen on early January 12, the report said.
Denmark’s Torm was also among the tanker operators seen rerouting vessels around the Cape of Good Hope at the southern tip of Africa, while Shell was said to have suspended all shipments through the Red Sea.
Rising attacks
The Zografia, a Maltese-flagged bulk carrier, was struck by an anti-ship ballistic missile originating from Yemen on January 16. It was the latest in nearly 30 maritime attacks attributed to Houthi militia since November, and came after the US and UK launched retaliatory strikes against Houthi positions. While BP had announced on December 18 that it had suspended tanker voyages through the region, rising tensions had otherwise left tanker transits relatively uninterrupted in late 2023.
With ships diversions around the South of Africa expected to add around two weeks to journey times, the slump in tanker transits has dashed hopes that the oil market might stave off bullish pressure from the Red Sea tensions and adds pressure to freight costs, S&P Global said.
According to data from S&P Global, diesel and gasoil stocks sit at 1.963 mt, which is 2,57,000 tonnes below the five-year average and 6 per cent lower than 2023 levels.
