Suez Canal Blockade Offers Temporary Support To Oil Prices

KUALA LUMPUR, March 29 (Bernama) -- The crisis in the Suez Canal offers support to oil prices and halt the recent slide in the commodity's price, said an analyst. Axi chief global market strategist Stephen Innes said the effect was more oil sitting idle on water, instead of making its way to refineries so gasoline producers would need to draw inventories, adding pressure on the spot price. "The impact is short term. Normally collisions in and around ports are handled quickly but this is an enormous vessel to refloat and salvages are simply not equipped for. High tides from the full moon are raising optimism it could be freed this week," he told Bernama. According to dpa's report Monday, the container ship blocking the Suez Canal since Tuesday has been freed and refloated, quoting maritime service provider Inchcape Shipping. On Friday, oil prices jumped more than 4.0 per cent on concerns over global supplies of crude and refined products could be disrupted for weeks as the salvage team tried to dislodge a giant container ship blocking the Suez Canal. Since March 23, a 224,000-tonne vessel The Ever Given ran aground due to poor visibility as it was caught in heavy winds and sandstorm. Rescue efforts to refloat the ships have been underway but poor weather conditions and size of the vessel is making the rescue operations difficult. Moody's Analytics said the supply-chain disruptions due to the closing of the Suez Canal would not have a strong impact on the near-term economy, since transport costs were a small component in the final cost of most goods. "The immediate impact of the canal's closing is largely related to the quick but modest rise in oil prices: Producer prices edge up with higher energy costs," its chief Asia-Pacific economist Steve Cochrane said in an analysis report today. In the longer term, the transport costs would rise for goods shipped between Asia and Europe if the canal remains closed as shippers use alternate routes. -- BERNAMA