Global oil prices rebounded sharply Wednesday after a Taiwanese container ship blew off course in the Suez canal, creating a bottleneck that could slow the delivery of more than 13 million barrels of crude through one of the world's busiest waterways.
A tanker known as the Ever Given, which is more than 1,300 feet long and has a deadweight total of 224,000 tons, ran aground in the Suez earlier Wednesday, causing a traffic jam of ships carrying everything from crude oil to auto parts. The Suez Canal Authority, which is responsible for the 120 mile waterway, said the ship has been moved away from the main traffic lanes and expects normal service for the delay vessels to resume in the coming days.
Still, the Gulf Agency Company has estimated that some 42 vessels were impacted by the Ever Given's grounding, according to Blomberg, while Reuters has estimated the direct impact on oil shipments at 13 million barrels.
"Just as the oil market was staring at a potential deeper loss it received a Suez blockage bounce overnight," said Saxo Bank's head of commodity strategy Ole Hansen. "The Suez Canal is one of the world’s busiest waterways and a delay running into days, not hours, will cause a major congestion and delay in the two-way flow of both oil and fuel products."
"However, while the blockage is a problem for refined products, crude oil can bypass the canal via two large nearby regional pipelines: Sumed (South-to-north) and Ashkelon-Eilat, which is bi-directional," he added.
That hasn't put a lid on global crude prices, however, which jumped on the news following yesterday's 7% sell-off, with traders also citing factory output data from Germany, which hit the highest levels on record this month, that indicated the potential for pent-up energy demand to be unleashed once the pandemic has run its course in Europe's biggest economy.
Gains were capped, however, by data from the the American Petroleum Institute last night showing a surprise 2.4 million increase in domestic crude stocks, and Baker Hughes figures from last week showing that 9 new rigs came online as of March 19, taking the overall total to 318, as U.S. drillers return to full capacity following the February winter storms that knocked out installations in Texas and the Southwest.
WTI crude futures for May delivery, the benchmark for U.S. oil and gas prices, were marked $3 cents higher on the session at $60.75 per barrel, while Brent crude contracts, which are more tightly-aligned to global prices, rose $3.15 to $63.94 per barrel in early New York trading.