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Oil prices, memes rise as Suez jam continues

The Ever Given container ship continues to block the Suez Canal, proving to be bullish for both oil prices and memes.
Suez Canal Authority (SCA)

The MT Ever Given remains stuck across the Suez Canal, driving up oil prices – and jokes on social media.

“Today the market is up again as traders in a change of heart decided that the Suez Canal blockade is actually becoming more significant for oil flows and supply deliveries than they previously concluded,” said Rystad Energy’s Vice President Oil Markets Paola Rodriguez Masiu.

Because of the blockade, a number of ships are starting to divert around Africa.

Masiu went on to say this would be a costly and challenging endeavour. Such a diversion will delay current deliveries and have a knock-on impact for future fixtures.

“Going around Africa also involves a different risk, that the Canal could be opened again within days,” the Rystad expert said. “Trading firms and shipping conglomerates now have to work on engineering calculations of how quickly Ever Given can be freed to decide on routes and orders.”

Japanese shipowner Shoei Kisen Kaisha issued an apology for the Ever Given. The company said it was working with local authorities, and ship manager Bernhard Schulte Shipmanagement (BSM), to tackle the issue.

Making plans

Taiwanese Evergreen Line said the owner had appointed Smit Salvage and Nippon Salvage to help re-float the vessel.

However, “the situation is extremely difficult”, Shoei Kisen Kaisha said. “We will continue to do our utmost to take the ship off the reef, and will continue to work toward an early resolution of the situation.”

BSM said the focus was on dredging to remove the sand and mud from the port side of the vessel’s bow. The ship manager confirmed there were two canal pilots on the vessel when it ran aground, blaming the incident on strong wind.

The Suez Canal Authority (SCA) confirmed the Netherlands-based Smit was supporting its efforts to tackle the Ever Given problem. The SCA said it was working to the highest standards of maritime safety.

The SCA has deployed two dredgers and nine tugs to the area in an attempt to free the vessel. The Ever Given has a draught of 15.7 metres.

If the team is unable to re-float the ship, they may need to remove the cargo containers. This would require additional infrastructure such as cranes.

The US has offered assistance in helping tackle the Ever Given. The SCA welcomed the offer and said it looked forward to co-operating on this issue.

Congestion

Authorities have asked vessels from the Red Sea to drop anchor out of port limits. “The Suez area is fully congested”, GAC Hot Port News said.

Rystad’s Masiu went on to say that the Sumed pipeline had sufficient capacity to move oil.

“We find that the winds of oil fundamentals are blowing in the opposite direction, with the worst fears of the energy industry materialising: another spike of Covid-19 cases and new lockdown measures,” the analyst said.

The Ever Given’s plight has struck a nerve with online communities.

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