Red Sea Shipping Crisis: Impact on Global Bunker Demand and Inflation
The re-routing of ships around Africa to avoid potential attacks in the Red Sea is increasing demand for bunker fuel at ports in Africa and the Mediterranean, with prices rising significantly. Attacks by Yemen's Houthi militia on merchant ships in the Red Sea have led to tensions in the Middle East, prompting ships to divert around the southern tip of Africa. This has caused congestion in bunkering ports around Africa and put pressure on port infrastructure. Bunker fuel demand has risen at ports in Mauritius, Gibraltar, the Canary Islands, and South Africa, with prices jumping in Cape Town. Singapore and Rotterdam are expected to see increased demand for bunker fuel as ships seek competitive prices and hedge against route uncertainties.