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The price of oil falls due to the decision of Maersk and CMA to return to using Suez

West Texas Intermediate (WTI) crude prices fell more than 2% on Wednesday, with Brent closing with similar losses, as global shipping giants prepare to resume sailing in the Red Sea despite continued missile barrage of the Houthis.

As of 3.43pm on Wednesday, WTI was down 2.02% at $74.04. Brent crude was down 1.86% at $79.56.
Oil prices continued to fall on confidence that a US-led international task force, called Prosperity Guardian, can protect merchant ships from Houthi targets in the Red Sea on the way to the Suez Canal.

In reality we know that the task force will be primarily an American-British force, but nevertheless its commitment has convinced some large shipping companies to change their decision to avoid the Red Sea.

On Wednesday, Danish giant Maersk confirmed it had dozens of ships scheduled for the Suez Canal, via the Red Sea, in the coming weeks after a temporary halt. The French CMA CGA has also decided to resume this very important route, despite the risks. The Houthis are targeting merchant ships passing through the Bab al-Mandab Strait between Djibouti and Yemen.

The US Central Naval Command released data showing a minimum of 15 commercial vessels attacked by the Houthis in November and December, with the latest attack taking place on Tuesday, December 26.

While Maersk and others are resuming navigation in the Red Sea, using an evasive maneuver, Germany's Hapag-Lloyd said Wednesday it will not follow suit, deeming the Suez Canal route still too dangerous despite U.S. military protection, as reported the BBC. Instead, the shipping giant will reroute ships via the Cape of Good Hope, which adds 3,500 nautical miles to the journey and a concomitant increase in shipping costs. Hapag-Lloyd is the fifth largest shipping company in the world by capacity.

Shippers will continue to assess the situation, and Maersk also noted that “overall risk in the area has not been eliminated at this stage.” Which means that the decision to pass through the Red Sea can still be changed.


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The article The price of oil falls due to the decision of Maersk and CMA to return to using Suez comes from Economic Scenarios .


This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/il-prezzo-del-petrolio-cala-per-la-decisione-di-maersk-e-cma-di-tornare-a-usare-suez/ on Thu, 28 Dec 2023 09:00:47 +0000.