ASIATODAY.ID, GAZA – The situation in the Red Sea has continued to be volatile for some time following the increasing number of attacks on cargo ships sailing in this sea, precisely west of the Arabian Peninsula which separates the Asian and African continents.
Oil prices are predicted to skyrocket at the end of this year until 2024. The four largest shipping companies in the world, namely MSC, Maersk, Hapag-Lloyd, and CMA CGM announced that they would temporarily stop all travel through the Red Sea, following a series of attacks in the Bab El Mandeb Strait by Houthi rebels in Yemen. The Iran-backed rebel group targets ships bound for Israel as part of its alliance with Hamas.
The International Chamber of Shipping estimates that around 12% of world trade passes through this narrow waterway.
“Oil prices have an impact due to tensions in the Middle East, oil prices will be higher, whether we like it or not,” said Dr Karamperidis, an international trade analyst quoted from Inews.co.uk, Monday. December 18, 2023.
Although the majority of oil deliveries to the UK ahead of Christmas from the region have already taken place, the impact on supply chains could be severe early in the new year.
“It was a peak period for oil,” said Dr Karamperidis.
In that period, temperatures in Europe were at their lowest, and oil prices were generally at their highest levels.
He said the attacks in the Red Sea occurred when Russian oil was blocked. “If we lose 10% to 15% of oil imports from the Gulf, it is estimated to be equivalent to a total of 30% to 40% of global capacity,” Karamperidis said.
Shipping expert and Director of Red Sea Shipping Ltd, Kfir Magen, warned that there would be a sharp increase in commodity prices due to the surge in oil prices.
He said the number of incidents in the Red Sea would force commercial ships to sail past the Cape of Good Hope in South Africa.
“This will add an average of 20 days to travel time as well as additional fuel costs and operational costs,” he said.
As attacks in Middle Eastern waters increase, the London insurance market has listed the southern Red Sea as a high-risk area due to the Israel-Hamas war. Insurance premium prices will likely increase by about $100 per shipping container.
According to Deputy Chair of the Chartered Institute of Logistics and Transport, Sue Terpilowski, the Red Sea is an important route for trade between Asia and Europe. (ATN)
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