This week: all eyes are on developments at the Suez Canal after a grounded container ship brought traffic to a standstill. We’ll also take a look at expectations ahead of the OPEC meeting on April 1, as well as the state of thermal coal supply after floods in Australia.
But first, energy, commodity and shipping market participants will be paying close attention to the ongoing efforts to free the Ever Given container ship that ran aground on March 23. The incident is causing a massive congestion at the Suez Canal. More than 320 ships carrying oil, petrochemical products, automotive parts, grains and consumer goods remain stranded.
The Suez Canal is a critical commodity chokepoint that connects the Red Sea with the Mediterranean. As one of the world’s busiest waterways, even the slightest delay in traffic can result in congestion and disturb the delivery of goods and commodities.
Asian crude importers are already expecting a delay of around one week for some light sweet crude cargoes loaded from export terminals in the Mediterranean Sea . Most of the deliveries are via the Cape of Good Hope. But more importantly empty crude tankers moving from Asia across the canal to pick up North Sea barrels have also been delayed. Refined product exporters are also feeling the pinch. Gasoil and jet fuel from the Persian Gulf and India that cross the Suez Canal to Europe are now indefinitely delayed. As if this is not enough, naphtha shipments from the Mediterranean to North Asia are also running behind schedule.
With these delays, clean tanker freights are expected to hit fresh year-to-date highs. Long Range 2 tankers typically enjoy a discount over the Long Range 1s on the benchmark Persian Gulf-Japan route. We’re now seeing a role reversal as supply of the bigger tankers has tightened significantly.
Even the metals sector is not left untouched by the Suez Canal accident. While it is not expected to immediately impact supply, higher bunker prices, rising freight costs and squeezing of inventories could drive up prices of steel and copper in particular.
So for our social media question this week: When do you expect the Suez Canal congestion to be cleared and for commodities to start flowing smoothly again? Share your thoughts with the hashtag PlattsMM.
Meanwhile, coal market participants are monitoring the supply situation in Australia following floods in New South Wales and repairs at Newcastle port. These crippled the trade at a time when India was expected to sniff around for cargoes to build up the pre-monsoon inventories.
And finally back in oil, market participants will be closely watching the upcoming OPEC meeting on April 1. The meeting is expected to provide guidance to the group’s production plan from May onwards. Analysts generally expect OPEC+ to roll over their production cuts, after panic sell-offs seen earlier this month highlighted the frailty of oil prices.
Meanwhile, ICE Futures Abu Dhabi is launching on March 29 on which the Murban futures contract and 18 cash-settled derivatives and inter-commodity spreads will trade. Murban is ADNOC’s largest crude by volume, and is popular with Asian refineries, with top destinations including Japan, Thailand and China.
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Thanks for kicking off your Monday with us. Have a great week ahead!