Suez blockade a minor issue for LNG for now: WoodMac

The blockade in the Suez Canal is not expected to have a major impact on LNG shipments at this time, a March 24 report from Wood Mackenzie stated.

WoodMac reported late on March 24 that at least 15 ships laden with LNG were waiting for the channel to be cleared. A cargo vessel headed northbound, the Panama-flagged Ever Given, became wedged on March 23 in the man-made canal dividing Africa from the Sinai Peninsula, creating a major traffic jam.

"The impact of this disruption on the LNG market will be limited if the disruption is solved within a day or two. Only a handful of LNG cargoes were in the close vicinity of the Suez Canal when the incident started,” Lucas Schmitt, a principal analyst at WoodMac, stated. “At this stage, we don’t expect major bottlenecks, unless the situation drags on.”

The Suez handles about 8% of the global shipments of LNG and about 10% of crude oil. The price for major commodities spiked during trading on March 24, but have retracted since. Natural gas prices on the New York Mercantile Exchange were down early on March 25.

Efforts to clear the canal using tugs and dredgers have so far proved futile. The port authority in Suez stated today that eight large tugboats were continuing their work to free Ever Green.

Should the situation be prolonged, shippers may have to wait it out or go around the Cape of Good Hope to their destinations.

“Further delays would impact both loading and discharge schedules and disrupt some flows, mostly to the European market,” Schmitt added.