Oil Price and Lingering Suez Factor
The container ship that has been stranded in the
Suez Canal since Wednesday has moved about 100ft into the middle of the canal
from where it was, according to the latest report.
When it’s going to be at the centre of the canal,
however, is anybody’s guess at present; it appears to be much complicated than
originally thought, due to its sheer size, length and the weight of its cargo.
As the gap between one end of the ship and the bank
of the canal is not very wide, the salvage crews have been forced to go at a
slow pace – for obvious reasons.
As the last resort, meanwhile, Egypt’s President
Abdel Fattah el-Sisi, has ordered the Egyptian authorities to lighten the ship
in order to make it movable easily; if everything else fails, they may be compelled
to go for the option despite multiple disadvantages it poses.
If the Egyptian authorities decide to go ahead with
the plan, although it makes sense in the protracted operations without an end
in sight, the process will take days to complete while making the ships and the
boats in the queue behind the stricken liner stay even longer; there are reports
that say about the presence of live animals inside some of those ships.
Some companies, having waited for days for a breakthrough,
are taking the alternative, despite the increased cost and the significant time
– taking the pre-Suez route around Africa.
The blockade has already started making an impact on
the crude oil market across the world. In addition, some countries, such as
war-torn Syria has begun rationing fuel to deal with a potential energy crisis.
In a new twist, meanwhile, the chief of the SCA,
Suez Canal Authority, says that they will look into the possible human error in
the incident too, although high gusts of wind are still thought to be the main factor
for the mishap.
The presidential order to expedite the operation
comes amidst the frustration of the companies whose ships have been in anchor
for days with their precious cargo. The losses suffered by Egypt are very significant
too – revenue loss of about $14million a day.
Amidst the turmoil in the Suez Canal, the oil price
rose again, reversing both the downward trend and the palpable negative
sentiment.
The impact of the success of the salvage operations
on the crude oil price is something that remains to be seen in the next week.
