How Red Sea attacks could affect the seaborne transport of oil, gas cargoes

Shipping companies & LNG tankers avoid Red Sea route due to Houthi attacks, raising disruption to global commerce & prompting US-led force to patrol waters near Yemen.

Several shipping companies and a few liquefied natural gas (LNG) tankers have decided to avoid the world’s main East-West trade route, following attacks launched by Yemen’s Houthi group on commercial ships at the southern end of the Red Sea.

The attacks raised the spectre of another bout of disruption to international commerce following the upheaval of the COVID pandemic, and prompted a U.S.-led international force to patrol waters near Yemen.

The attacks have made reaching the Suez Canal more perilous. About 12% of world shipping traffic transits the canal and 4-8% of global LNG cargoes have passed through it in 2023.

As much as 8.2 million barrels per day (bpd) of crude oil and oil products traversed the Red Sea over January-November, as per analytics firm Vortexa.

This year, a total of 16.2 million metric tonne (mmt), or 51% of LNG trade, has flowed from the Atlantic Basin east through the Suez Canal, while 15.7 mmt went through the canal from the Pacific Basin west, according to S&P Global Commodity Insights.

The Suez Canal is one of the most important arteries of the global oil trade.