Surge in Global Oil Shipments via Cape of Good Hope amid Red Sea Attacks

Yemen's Houthis rebels have been targeting vessels in the Red Sea, prompting a significant shift in global shipping patterns

Global crude oil and oil product shipments taking the longer route around the Cape of Good Hope have surged by 47% since attacks on vessels using the shorter Red Sea route began, the Energy Information Administration (EIA) reported on Tuesday. Yemen's Houthis rebels have been targeting vessels in the Red Sea, prompting a significant shift in global shipping patterns.

Usually the Red Sea and Egypt's Suez Canal carry around 12% of all shipping activity worldwide. However, the increased risk has driven many to opt for the southern detour around Africa, increasing shipping costs. According to ship tracking data from Vortexa, the average amount of oil and refined products moved over the Cape of Good Hope route in the first five months of 2024 was 8.7 million barrels per day (bpd), compared with an average of 5.9 million bpd in 2023. Saudi Arabia and Iraq have redirected more crude oil to Europe via this longer route, contributing to 15% of the total increase. Asian and Middle Eastern refiners have also ramped up their exports to Europe, with these redirected shipments accounting for 29% of the increased trade.

The United States has followed suit, with its trade around the Cape of Good Hope rising by one-third, or just over 600,000 bpd. This includes receiving crude oil and refined products from the Middle East and Asia while increasing its exports to Asia. Russia, impacted by frequent Houthis attacks, has seen a nearly fourfold increase in its crude oil and refined product shipments to Asia via the Cape, including volumes from the Caspian Pipeline Consortium, in the first five months of 2024 compared to 2023. The Houthis claim their attacks are acts of solidarity with Palestinians in the ongoing Gaza conflict.