A report by Bloomberg International revealed that the Bab al-Mandab Strait, separating the Arabian Peninsula and Africa, has not witnessed the passage of any liquefied natural gas tanker for four months, which is a testimony to the extent of the impact of the violent attacks launched by the Houthis on global energy trade.

According to the report, dozens of ships were crossing the Bab al-Mandab Strait every month before the escalation of the Israeli war in Gaza, but the Houthi attacks in Yemen led to this number decreasing to zero since mid-January.

The ongoing attacks have forced ships to reroute around Africa to transport fuel between the Atlantic and Pacific basins, leaving buyers with a limited pool of suppliers unless they are willing to pay higher shipping costs. The result is that the global LNG market has become increasingly fragmented. Unprecedented.

Merchants were forced to find destinations for their shipments near their places of production to save on transportation costs.

These efforts are likely to increase when demand for fuel rises in preparation for the upcoming winter, during which shipping costs typically also rise.

One of the solutions to this unprecedented crisis is to switch the destinations of shipments, for example, by directing American liquefied natural gas to Europe, and finding similar supplies in Asia to meet contractual obligations with a buyer there.

According to ship-tracking data on Bloomberg, the volumes of Qatari LNG ending up in Asia in the first quarter of 2024 reached their highest level since at least 2017, while Russia pumped more of its ultra-cooled fuel to Europe.

The Red Sea and its Suez Canal previously accounted for about a tenth of global maritime trade, providing Qatar with the shortest route to Europe, which has turned to liquefied natural gas since it lost pipeline flows from Russia.

The longer distances ships now travel limits the number of possible tankers, adding about 4 percent to global demand for shipping oil and gas products, according to Clarkson Research Services, a unit of the world's largest ship broker.

Thousands of miles away, transits through the Panama Canal have also declined, after an unprecedented drought reduced traffic there.

The expected increase in US LNG supplies by the end of the decade will do little to ease the burden on the Panama Canal sea lane.

Despite the Red Sea turmoil that escalated in January, the daily cost of chartering a tanker has remained resilient and has even declined so far.
This reflects the relaxed supply situation in markets such as Europe, which experienced mild winters and weak industrial fuel consumption.