Energy giant BP joins other shipping companies in temporarily halting transits through the Red Sea due to security concerns. The attacks by Houthi militants are believed to be in response to Israel's military campaign in Gaza.
Energy giant BP has joined several major shipping companies in temporarily halting transits through the Red Sea. This decision comes in response to recent attacks on tankers and container ships by Houthi militants from Yemen. The Houthis claim these attacks are a response to Israel's military campaign against Hamas in Gaza.
BP, a London-listed company, prioritizes the safety and security of its personnel and those working on its behalf. In light of the deteriorating security situation in the Red Sea, BP has decided to suspend all transits through this region. The company will continuously review this precautionary measure based on evolving circumstances in the area.
Other shipping companies that have also paused sailings through the Red Sea include Danish company A.P. Moller-Maersk, which is the second-largest owner of container ships globally, and Germany's Hapag-Lloyd, which is the fifth-largest. Swiss/Italian company MSC and French company CMA CGM, the first and third-biggest shipping companies respectively, have also joined in halting sailings through the region.
Following the Houthis' explicit intentions to target ships believed to be sailing to Israel, shares of listed companies, particularly A.P. Moller-Maersk, experienced a significant decline at the beginning of November.
BP aims to closely monitor the security situation and will reassess its decision as circumstances develop in the area. The safety and well-being of all those involved remain of utmost importance to the company.
Investors were anxious about the possibility of ships having to navigate around the Cape of Good Hope instead of utilizing the Suez Canal, which handles approximately 34% of global container traffic.
However, following a significant rally on Friday and further gains on Monday, shares of shipping giants Maersk and Hapag-Lloyd have largely recovered as investors anticipate an increase in shipping rates to compensate for the disruption.
Potential Upside Risks to Container Rates
The global shipping team at Citi, headed by Kaseedit Choonnawat, views the prolonged Suez Canal disruption as a potential upside risk to container rates, likely until the seasonal trough around Chinese New Year.
Mixed Performance in Equity Markets
As the final full trading week of the year kicks off, equity markets worldwide show a mixed performance. Germany's DAX DX:DAX, which reached a record high last week, declined by 0.4% due to car manufacturers surrendering some recent gains. On the other hand, France's CAC 40 FR:PX1 slid by 0.4% as the luxury goods sector experienced selling.
Meanwhile, the U.K.'s FTSE 100 UK:UKX rose by 0.4% driven by higher oil prices that benefited energy groups like BP. Additionally, Vodafone VOD, +5.81% VOD, -3.31% witnessed a surge of over 5% after finalizing a €10.45 billion ($11.4 billion) deal to merge its Italian phone division with French telecommunications group Iliad.
All Rights Reserved © 2024
Leave Comment