Suez-related delays not as bad as expected: Rystad

Shipments of petroleum, products and LNG may see some lingering delays because of the temporary blockade in the Suez Canal, but not as bad as expected, commentary supplied March 30 by Rystad Energy noted.

Efforts to free the container vessel Ever Given, which became lodged in the Suez Canal going northbound on March 23, finally succeeded this week, breaking a log jam that had upended commodity markets for nearly a week. On March 29, Ever Given floated to a holding area for inspection, clearing up at least some of the traffic.

“Some shipments will indeed be late but not as much as some pessimistic scenarios projected just days ago, which was also the reason that prices rose while the market waited for the stuck vessel to be removed,” Louise Dickson, an oil markets analyst at Rystad, said.

Commodities retreated from recent highs after the bottleneck eased earlier this week. Brent oil was down 1% as of 10 am ET to trade at $64.25/barrel, while the price for natural gas on the New York Mercantile Exchange was down 0.87% to trade at $2.60/mnBtu.

Clay Siegle, the managing director at Texas-headquartered cargo tracker Vortexa, said that some of the first tankers held up are now making their way north through the canal.

“Tankers are moving through in both directions,” he told NGW.

Egyptian president Abdel Fattah el-Sisi echoed the general sense of optimism by reassuring the maritime community that shipping lanes were open.

“Returning things to their natural course, by Egyptian hands, the whole world can rest assured that its needs will be met and goods will flow through this central navigational artery,” he said today.

The Suez Canal carries about 10% of the world’s maritime deliveries of LNG and crude oil. Some vessels opted to reroute around the Cape of Good Hope to avoid further delays.

With the artery cleared, Dickson said the market focus will shift to a meeting later this week of OPEC and its allies to consider May production levels. The group, dubbed OPEC+, surprised the market by choosing to maintaining most output cuts in April, bucking expectations of a gradual release of more barrels for the global economy.