Shipping Faces Lengthy Disruptions As Middle East Fallout Worsens

The Red Sea crisis, and the situation in the Middle East  in general, continues to worsen. Ship diversions around the Cape of Good Hope are expected. To expand in scale and take much longer than originally expected. This is likely to be good news for long-term shipping inventories due to longer transportation distances. The Houthis on Friday attacked the JPMorgan product tanker. Merlin Luanda with a ballistic missile and set the cargo tank on fire. Trafigura, a trading company, chartered the tanker and loaded it with Russian naphtha.

The fire was extinguished on Saturday and all crew members were safe. On Sunday, three American soldiers were killed. And at least 40 others injured in a drone attack by an Iranian-backed militia on a US military base in Jordan. The Biden administration has promised a response, raising concerns about a larger Middle East conflict.  Jefferies shipping analyst Omar Nokuta said in a  note to clients on Monday that. “Continued attacks on ships in the region have led to increased red sea diversions. And many shipping companies are are now avoiding passing through this area.

The vast Majority

” The vast majority of large container ships already avoid the Red Sea, with detours increasingly extended to bulk transport. Citing data from Clarksons. The 2023 average shows that crude oil tanker traffic in the region has decreased by 22%, as reported by Nocta.At the beginning of this year, it was 5% below the previous year’s average. Product tanker shipments are down 51% compared to 2023. After declining 29% at the beginning of the year compared to the previous year’s average, and liquefied natural gas tanker shipments are down 87% (from 36%). Liquefied natural gas tanker shipments are down 87%. % (from 36%), tankers decreased by 62% (from 23%).

Zim’s ‘scenario has changed’ Nokta has significantly improved its view on Israeli container company Zim (NYSE: ZIM). Saying ‘the scenario has changed’ as Houthis say Zim’s business ‘ “We are attacking from.” Nokta previously expected Zim to post an adjusted net loss of $260.1 million this year and a $506.3 million loss next year, but the new forecast is significantly different, with an adjusted net loss of $260.1 million this year and a $506.3 million loss next year. It expects net income to be $751 million and a loss of $337 million next year.

“The Red Sea diversion is likely to last for a long time and will strain production capacity for even longer,” he said.

Gym shares closed up 7.5% on Monday, a day when most shipping stocks closed in the red.”Shipping analyst at Evercore ISI, Jonathan Chappell, suggested adding tanker inventory to the list,” rather than “the list should have tanker inventory added to it,” to use the active voice. He presented data on the significant gains in tanker stocks and the S&P 500 since the invasion of Ukraine and Hamas’ attack on Israel. Shipping Stock Chart stocks have risen since the start of both wars.

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