This Monday, oil prices fell as the giant container ship Ever Given that blocked the Suez Canal for almost a week was refloated. Therefore, Brent crude oil fell as much as 2% before recovering to stand 0.06% lower at $54.03 a barrel this morning.
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Ever Given container stuck in the Suez Canal and oil prices drop
Oil prices fell as much as 2% this Monday, as the Ever Given giant container that blocked the Suez Canal for almost a week refloated. Accordingly, Brent crude oil benchmark fell 2% and recovered somewhat to stand 0.6% lower at ¢64.03 a barrel on Monday morning.
On the other hand, WTI crude was down 1.1% to $60.30 a barrel.
In fact, the Ever Given, an enormous container ship almost the length of the Empire State Building, remained stuck in the canal since Tuesday. Thus, completely blocking the route and cutting off global trade.
Moreover, almost 15% of world shipping goes through the Suez Canal. Hence, the blockage sent oil prices higher, as backlogs of energy shipments were lost. For instance, Brent crude rose near $65 over the week.
According to Bloomberg, the fall in oil prices signifies that the pressure on global supply chains is set to ease. Furthermore, local authorities said they would act fast to clear the backlog of ships at the crucial trade route.
Moreover, the Suez Canal Authority said that the Ever Given ship was successfully refloated and brought away from the shore on Monday. However, the authority said the ship was not yet wholly free.
Besides, it added: “Navigation shall be resumed immediately upon the complete restoration of the vessel’s direction.”
With an OPEC+ oil cartel meeting later this week, stakeholders, traders, and investors expect more certainty.
“Brent traded soft in the morning session today after reports confirmed that the ship blocking the Suez Canal refloated. Although, it’s still unclear how soon the trade route could reopen,” Warren Patterson, head of commodities strategy at Dutch bank ING, said.
On the other hand, Jefferies analyst David Kerstens said the Suez blockage would worsen global trade. In fact, it will affect further the already disrupted market by the coronavirus crisis.
Besides, he said shipping capacity on the Asia-Europe route would be “temporarily reduced by c.25%. On the contrary, port congestion is set to further increase in a market with supply chain bottlenecks and equipment shortages.