Name: Suez Canal gridlock highlights its impact on oil and shipping prices
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Suez Canal gridlock highlights its impact on oil and shipping prices

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This article is more than 1 year oldThis article is more than 1 year oldAnalysis: blockage of route through Egypt provides a reminder of its importance to global tradeLast modified on Fri 26 Mar 2021 12.03 EDTThe impressive span of Al Salam Bridge at El Qantara in Egypt gives a unique view over the .On a normal day a procession of bulk carriers in convoys can be seen for miles creeping into the hazy distance on both sides.Not now, however. The 120-mile man-made waterway, officially opened in 1869 and periodically a source of tension, that has run aground, shutting the passage that carries one-tenth of the world’s shipping by tonnage and causing a gridlock of about 100 vessels.The Ever Given, a 220,000-ton container ship that is 400 metres long and almost 60 metres wide, has become wedged between the two sides of the canal, apparently grounded by wind during a sandstorm, with tugs and mechanical excavators trying to free it. The ship was en route from Yantian in China to Rotterdam.Connecting the Mediterranean with the Indian Ocean via the Red Sea, the importance of the canal is that it allows a direct route for shipping between Europe and Asia without having to go all the way around .Originally suggested by the French engineer Linant de Bellefonds, who surveyed the region and discovered the potential for a lockless canal to be constructed because of the relative altitudes on either side, construction began at the northernmost Port Said end in 1859 and lasted 10 years, with about 1.5 million people involved in the excavation.While issues do occur in the canal, most recently in 2018 when it was blocked after a collision, the scale of the problem on Tuesday was quickly apparent.According to some estimates about 10m barrels of oil products were backed up at the two ends of the canal, with some shipping being diverted through “historical” sections of the channel, which has been widened and deepened in places over the decades – most recently in 2015 – to accommodate ever larger ships.The canal is particularly important for global oil supplies. Ten per cent of global oil passes through the canal and an associated pipeline network, and it has become an important route for Russian oil to reach Asia.Last year about 19,000 ships, or an average of 51.5 ships a day, with a net tonnage of 1.17bn tons passed through the canal, according to the Suez Canal Authority, providing an important source of revenue for Egypt’s battered economy by bringing in almost $6bn (£4.4bn) in fees.Egypt has set ambitious targets to increase the traffic for a passage that takes half the time for an oil shipment from the Gulf to the UK compared with the route around the southern tip of Africa.With so much global oil traffic dependent on the canal the immediate risk if it is not quickly reopened is higher oil prices, as well as more expensive shipping container contracts if ships are forced to take longer and more time-consuming routes.The prospect of a more protracted delay was raised on Wednesday as canal authorities struggled to free the Ever Given. “It could take a while,” a transit agent for vessels in the canal told ShippingWatch, an industry website.The vulnerability of global trade to any closure of the canal has long been known, not least closures caused by conflict.Defended by British forces from the Ottoman empire in the first world war, it was controlled by the UK until 1956, when British forces withdrew and handed control to Egypt.President Gamal Abdel Nasser’s quick nationalisation of the canal’s operation and subsequent decision to close the strait of Tiran to Israeli ships led to the of 1956. Israel, France and Britain secretly conspired to intervene, with British paratroopers dropping along the canal, triggering a political crisis that ultimately led to the 1957 resignation of the prime minister, Anthony Eden, who had misled parliament.

This article is more than 1 year oldThis article is more than 1 year oldAnalysis: blockage of route through Egypt provides a reminder of its importance to global tradeLast modified on Fri 26 Mar 2021 12.03 EDTThe impressive span of Al Salam Bridge at El Qantara in Egypt gives a unique view over the .On a normal day a procession of bulk carriers in convoys can be seen for miles creeping into the hazy distance on both sides.Not now, however. The 120-mile man-made waterway, officially opened in 1869 and periodically a source of tension, that has run aground, shutting the passage that carries...

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Peter Beaumont

TheGuardian.com, formerly known as Guardian.co.uk and Guardian Unlimited, is a British news and media website owned by the Guardian Media Group. It contains nearly all of the content of the newspapers The Guardian and The Observer, as well as a substantial body of web-only work produced by its own staff, including a rolling news service.

Suez Canal gridlock highlights its impact on oil and shipping prices

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