The U.S. energy envoy Amos Hochstein stated that the cost of rerouting ships to avoid potential attacks in the Red Sea is more logistical than inflationary.
Hochstein clarified that the United States continues to work on mitigating the impact of the risks posed by the Yemeni Houthi group.
The daily costs of oil tankers have surged to over $100,000 due to the ongoing Red Sea crisis impacting shipping operations.
The cost of shipping refined oil from the Middle East to Japan has increased by 3%, reaching $101,000 per day, according to data from the Baltic Exchange in London.
Since 2020, amidst the coronavirus pandemic, the costs for the oil tanker route that bypasses the Red Sea have reached their highest levels.
Standard & Poor’s Global, “S&P,” stated that navigation disruptions in the Red Sea due to the existing geopolitical tensions in the Middle East are adversely impacting global trade flows.
The agency stated in a report that a substantial amount of the shipping traffic that typically passes through the Suez Canal is rerouted around the Cape of Good Hope. This includes shipments of liquefied natural gas and oil exports from the Gulf Cooperation Council countries, particularly from Qatar en route to Europe in the north.
Last week, the United Nations Conference on Trade and Development (UNCTAD) reported that shipping traffic passing through the Suez Canal had dropped by 45% in the past two months.
This decline came after shipping companies rerouted their vessels in response to Houthi attacks in the Red Sea, causing further disruption to already volatile maritime trade routes.
UNCTAD, which supports developing countries in matters of global trade, has warned of the risks posed by rising inflation, uncertainty concerning food security, and the increase in greenhouse gas emissions that contribute to global warming.
Shipping companies have altered their vessels’ routes to steer clear of the Red Sea ever since the Houthi movement in Yemen, which is allied with Iran and controls large territories in Yemen, started attacking ships, claiming it as an act of solidarity with the Palestinians in Gaza.
In response, the United States and the United Kingdom launched air strikes against the Houthis.
