IEA lists possible outcomes of oil transit bypassing Red Sea

IEA lists possible outcomes of oil transit bypassing Red Sea
# 18 January 2024 14:50 (UTC +04:00)

The transit of oil around the Cape of Good Hope in Africa, bypassing the Red Sea, along with delaying supplies, increases the risk of supply chain "bottlenecks", increases freight costs, and risks of reinstating inflationary pressures, APA-Economics reports citing the monthly report of International Energy Agency (IEA).

"The main alternative for ships transiting the Suez Canal in the Red Sea is to reroute around Africa's Cape of Good Hope. The main alternative shipping route around Africa’s Cape of Good Hope extends voyages by up to two weeks, which, in addition to delaying supplies, increases the risk of supply chain bottlenecks, increases freight costs, and risks of reinstating inflationary pressures.

The Agency believes that if the alternative route is used for a long time, it might affect the European prices of especially oil products. The increase will primarily affect diesel fuel.

The Houthi movement, which controls much of Yemen's Red Sea coast, has previously warned of its intention to attack any ships linked to Israel and called on other countries to withdraw their crews from said ships and not approach them. Several shipping companies have decided to stop shipping through the Red Sea.

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