The Red Sea Shipping Crisis: A Halt in Liquefied Natural Gas Carriers and a Surge in Energy Prices

The Red Sea shipping crisis has had a devastating impact on global trade and supply chains, with the potential to cause a ripple effect of higher costs throughout the world economy. The crisis has disrupted one of the most important arteries in the global shipping system, which has led to a decrease in the number of container ship transits by 67% compared to a year ago. This has resulted in a surge in average container spot rates, with average shipping cost rates from Shanghai more than doubling since early December 202. The crisis has also led to a halt in liquefied natural gas (LNG) carriers since January 16, 2024, according to the United Nations Conference on Trade and Development (UNCTAD).

The Red Sea crisis is not the only choke point that threatens to disrupt global supply chains. With the Panama Canal in drought and the Strait of Hormuz also vulnerable to Iran, global trade routes are under severe pressure. The challenges come on the back of pre-existing disruptions to global trade caused by the war in Ukraine and the abnormally low water levels in the Panama Canal due to climate change impacts.

When it comes to the longer-term economic impacts of the Red Sea crisis, experts are uncertain about the extent of the impact. According to Bob Elliott, CEO of Unlimited, “the most honest answer” experts can give is “I have no idea” at this point. However, the crisis has already led to a surge in energy prices, with crude oil prices rising by 5% on January 25, 2024, due to concerns over supply disruptions.

In conclusion, the Red Sea shipping crisis has had a significant impact on global trade and supply chains, with the potential to cause a ripple effect of higher costs throughout the world economy. The crisis has disrupted one of the most important arteries in the global shipping system, leading to a decrease in the number of container ship transits and a surge in average container spot rates. The crisis has also led to a halt in liquefied natural gas (LNG) carriers and a surge in energy prices. While the longer-term economic impacts of the crisis remain uncertain, it is clear that the crisis has already had a significant impact on global trade and supply chains.

See also

The Red Sea Shipping Crisis Impact On Global Trade And Supply Chains

Who Are the Houthi Rebels and What Do They Want? A Brief History

The Red Sea Shipping Crisis: A Call for International Cooperation

The Houthis’ Red Sea Attacks: A Multifaceted Motivation

The Red Sea Crisis: A Geopolitical Tug-of-War