British BP Suspends Red Sea Oil Transit Amid Rising Houthi Attacks on Shipping
British energy giant BP announced on Monday its decision to halt the transit of oil through the Red Sea, citing increasing security concerns and aligning with other companies.
This move is a response to the escalation of security issues in the region. BP's decision aligns with similar actions taken by other companies due to rising military tensions.
In a statement released by BP, the primary reason for this suspension is the worsening maritime security situation in the Red Sea. "In light of the deteriorating maritime security situation in the Red Sea, BP has decided to temporarily suspend all transits," the statement reads.
This decision reflects growing concerns among international companies regarding the safety of maritime operations in the region. The suspension is seen as a precautionary measure to ensure the safety of company operations and personnel.
Terrorist attacks by the Houthi rebels from Yemen are targeting the route facilitating trade from East to West, passing through the Red Sea to the Suez Canal, which accounts for 12% of global trade.
After a series of rocket attacks on various commercial vessels, two major shipping companies announced the cessation of operations in the region, through which goods worth $1 trillion pass annually.
Danish shipping giant Maersk stated it is halting operations in the Red Sea until further notice after its vessel MSC Palatium III was attacked.
German shipping company Hapag-Lloyd, whose ship Al Jasrah was targeted, declared a suspension of operations in the critical zone, including the narrow Bab-el-Mandeb strait.
In its statement, the Danish firm expressed being "deeply concerned" about the incident and called on the international community to take action.
BP's announcement today caused a 2.44% spike in Brent Crude Oil prices, rising above $78 per barrel, due to concerns about supply disruptions.
Natural gas prices also jumped 4.4% as investors factored in increased shipping costs and extended travel times.
According to S&P Global, the use of a longer alternative route around the Cape of Good Hope to reach Europe from the Persian Gulf increases tanker freight costs by 10%.
London's marine insurance market announced on Monday that it is expanding the high-risk zone in the Red Sea following Houthi attacks on commercial ships.
On Saturday, U.S. President Joe Biden called for striking the Houthis to stop ship attacks in the Red Sea.