Suez Canal Blockage to Ripple Through Global Energy Market

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The blockage of the Suez Canal by a giant container vessel is likely to send a ripple of disruption through the global energy supply chain.

European and U.S. refiners that rely on the vital waterway for cargoes of Mideast oil may be forced to look for replacement supplies should the blockage persist, potentially boosting prices of alternative grades. At the same time, flows of crude from North Sea fields destined for Asia will be held up.

The critical maritime trade route has been thrown into turmoil after the container ship ran aground on Tuesday, blocking traffic in both directions. While the vessel is only likely to remain stuck for a couple of days, that’ll be long enough to scramble some energy flows, creating an extra headache for refiners, traders and producers already coping with the pandemic’s fallout.

“There are plenty of alternative trades for European importers to avoid the Suez Canal,” said Ralph Leszczynski, head of research at shipbroker Banchero Costa & Co.

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