Suez Canal Blockage Disrupts Oil Shipments
March 26, 2021
The ship is still stuck in the Suez Canal and the estimates of when it will be free are all over the place, as well as, the number of ships backlogged. Bloomberg reports that 300 ships are backlogged. At this point everyone realizes that getting the ship free will take longer than expected. The estimates on oil shipments impacted are a wide range as well, but I will say it is roughly 2 million barrels per day that flows through the canal that is now shut down. Shipping rates for oil have roughly doubled in the last week.
OPEC+ meets April 1 and there is already estimates that they will continue with current production rates due to the fact that the market has seen a significant pullback. The other challenge for OPEC+ is that Iran continues to export more oil despite US sanctions.
Demand concerns in Europe due to rising COVID cases is still a head wind for energy prices. German and India reported separately the highest daily increases in new infections since January and October. Denmark extended its suspension of the AstraZeneca vaccine for three weeks. Chile announced lockdowns in Santiago starting this weekend.
It has been a volatile energy market with a down day followed by an update and then another down day. Price are up again today as the news about another drone attacked on Saudi Arabia’s oil infrastructure has traders buying and covering positions for the weekend.