Oil trades higher as Suez Canal jam continues

There's a massive ship stuck in the Suez Canal but at least it's delivering memes

An official from Shoei Kisen Kaisha, the Japanese company that owns the Ever Given, said Friday that crews were working to refloat the ship.

PHOTO: Stranded container ship Ever Given, one of the world's largest container ships, is seen after it ran aground, in Suez Canal, March 25, 2021.

Bernhard Schulte Shipmanagement, the technical manager of the ship, said another attempt on Friday to re-float the cargo carrier proved unsuccessful. A huge effort is now underway to free the ship to allow the free movement of trade once again.

An initial investigation showed the vessel ran aground due to strong winds and ruled out mechanical or engine failure as a cause, the company said. But the blockage of such an important global trade route means the domino-effect ramifications of the Suez Canal being out of service could have far-reaching consequences.

A specialized suction dredger that can shift 2,000 cubic meters of material every hour is now on the site, and "arrangements are also being made for high-capacity pumps to reduce the water levels in the forward void space of the vessel and the bow thruster room", the firm said Friday.

The backlog of vessels could stress European ports and the global supply of containers, already strained by the coronavirus pandemic, according to IHS Markit, a business research group.

Using data from Automatic Identification System trackers on ships at sea, data firm Refinitiv shared an analysis with the AP showing that over 300 ships remained en route to the waterway over the next two weeks.

It said 49 container ships were scheduled to pass through the canal in the seven days following Tuesday when the Ever Given became lodged. Data intelligence firm Kpler said that three of the tankers were being diverted towards the longer route around Africa, via the Cape of Good Hope.

About 10% of world trade flows through the canal, which is particularly crucial for the transport of oil. That adds about 15 days to a voyage from the Middle East to Europe.

The Ever Given's location, size and large amount of cargo make the operation more complex, Sloane said. But experts have said it could take weeks if the vessel's containers need to be removed.

"Aframax and Suezmax rates in the Mediterranean have also reacted first as the market starts to price in fewer vessels being available in the region", shipbroker Braemar ACM Shipbroking said.

The container shortage also means there is potential for a second toilet paper shortage, as mass wood pulp producers like Brazil struggle to find cargo vessels to ship their products - meaning worldwide product shipment delays. "So it's not an easy situation".

There are hopes that it may be possible to move the Ever Given on Monday, when the tide could be high enough to dislodge the 400m-long, 224,000-tonne container vessel.

Baron said the short term effects for both importing and exporting countries will be complications with finding alternate routes, and waiting longer for goods to arrive.

The backlog of vessels could stress European ports and the global supply of containers, already strained by the coronavirus pandemic, according to IHS Markit, a business research group. While a company might know it has a product sitting on a ship that's stopped, the impact of delays down the line are unknown.

An Egyptian canal authority official called the refloating a "very sensitive and complicated" operation which needs to "be handled very carefully". The official spoke on condition of anonymity as he was not authorized to talk to journalists.

It's unclear how the massive vessel turned sideways, its bow pressed against the eastern wall and its stern wedged in to the canal's western wall.

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