(ATF) As the 224,000-tonne container ship Ever Given lay stricken astride the Suez Canal, bringing a significant portion of global trade to a halt, the reverberations from its grounding continued to make waves, threatening the ships' owners with huge insurance claims.
Oil prices fell about 2% on March 24 as worries over new coronavirus pandemic lockdowns outweighed concerns over the estimated 13 million barrels of oil stuck on ships behind the Ever Given.
However, a prolonged shutdown of the canal is likely to squeeze oil supply in the near future, sending prices higher.
The owner and insurers of the Ever Given, one of the world's largest container ships, face claims totalling millions of dollars even if the ship is refloated quickly, industry sources told Reuters.
The ship's owner, Japanese firm Shoei Kisen KK, and its insurers could face claims from the Suez Canal Authority (SCA) for loss of revenue and from other ships whose passage has been disrupted. Taiwan's Evergreen Marine Corporation leases the vessel.
The 400-metre ship ran aground in the canal on Tuesday morning after losing the ability to steer amid high winds and a dust storm, the SCA said in a statement, threatening to disrupt global shipments for days.
“We’ve never seen anything like this before but it’s likely that resulting congestion will take several days to weeks to clear as it is expected to have a ripple effect on the other convoys, schedules and global markets – given the importance of the waterway," Ranjith Raja, head of Middle East and North Africa oil and shipping research at Refinitiv, said.
The Suez Canal is a vital point for global trade, including energy markets. About 10% of global seaborne oil trade passes through the canal as well as 8% of global liquefied natural gas trade.
"Clearly, the longer this disruption lasts the more likely we see refiners and buyers having to turn to the spot market to ensure supply from elsewhere," Warren Patterson, head of commodity strategy at ING, said.
"Shippers will also have to make the decision on whether to wait out the clearing of the stuck container ship or to go around the Cape of Good Hope [at the bottom of Africa] – either choice will lead to some delays," he added.
According to Lloyds List Intelligence data, there are 165 vessels waiting to pass through the canal behind the Ever Given, which includes 24 crude tankers, 15 product tankers and 16 LNG or LPG carriers.
GAC, a Dubai-based marine services company, said authorities were still working to free the ship mid-afternoon on Wednesday, and that information it had received earlier claiming the vessel was partially refloated was inaccurate.
"The vessel entered the canal some 45 minutes before it became stuck, moving at 12.8 knots just before the crash," said Raja.
“Typically, a pilot from Egypt’s canal authority would board a ship to guide it through the canal, but the ship’s captain retains ultimate authority for navigation,” he added.
With reporting by Reuters