According to newly released data from the UK’s Office for National Statistics (ONS), shipping traffic through the Suez Canal in Egypt has experienced a significant decline of 66% since December of last year. This decline is attributed to the attacks on vessels in the area, which have forced cargo to divert to alternative routes.
The ONS data covers the period from mid-December 2023 to the beginning of April 2024, providing insight into the extent of the disruption caused by the attacks. This is particularly significant as the Suez Canal serves as a crucial artery for global trade, connecting the Mediterranean Sea to the Red Sea.
The attacks, carried out by Iran-backed Houthi fighters, began in the run-up to Christmas last year and have targeted ships believed to have ties to Israel. While a US-led naval operation has been in place to protect vessels in the Red Sea, a number of attacks have still been successful.
As a result, many major shipping companies have opted to take the longer and more expensive route around the Cape of Good Hope, adding up to 14 days to transit times. This diversion to Europe from destinations such as China has caused a ripple effect, resulting in soaring costs for insurance, fuel, and wages. There are concerns that this could lead to a new wave of inflation, with companies reporting a hit from higher costs.
The ONS also reported a decrease in weekly crossings through the Strait of Hormuz, off the coast of Iran, between February and April. These crossings showed a “significant decrease” compared to previous years, with an average 23% reduction in crossing volumes during this period.
The impact of the attacks on shipping traffic has also been felt in the oil market, with the prospect of more perilous journeys for tankers contributing to rising oil prices. Brent crude, which was trading at around $80 a barrel at the start of the year, reached a high of $91 earlier this month. This is due to the see-saw of tension in the Middle East, particularly between Israel and Iran. However, with no further escalation since last week, Brent crude is currently trading at $88.
The AA, a British motoring organization, reported on Tuesday that average petrol costs in the UK had crossed back above the 150p-a-litre mark for the first time since November. Experts have warned that prices are likely to continue rising, as a weaker pound versus the dollar this month has added to the already high costs of oil, which is priced in US currency.
