February 21, 2024

Attacks on commercial vessels in the Red Sea by the Houthi rebels in Yemen have left oil tanker operators facing an unwelcome calculation: accept the risks of steaming through the danger zone, or lose business.

The risks of conflict in the area may even be increasing, with a coalition of 12 nations led by the United States warning Wednesday that it would “hold malign actors accountable for unlawful seizures and attacks.”

Despite the attacks and the risk of more, some oil companies insist that the ships they charter take this route rather than an excursion around Africa, which could require an extra two weeks at higher costs. Tanker owners “can take it or leave it,” said Henry Curra, head of global research at Braemar, a ship brokering firm in London.

The oil markets have largely shrugged off the drone and missile attacks so far. Traders figure that there is enough petroleum on hand around the world to deal with any supply problems.

“Oil and gas inventories are relatively healthy in most big demand centers, so there’s a sense that disruptions and delays could be bridged,” said Henning Gloystein, a director for energy and climate change at Eurasia Group, a political risk firm. Also, as global economic growth has slowed, demand for oil has eased.

While some oil companies including BP say they are staying out of the area, others are continuing to use the Red Sea, which provides access to European markets through the Suez Canal.

Lars H. Barstad, chief executive of Frontline, a large tanker company in Oslo, said, “If we have the ability to, we will avoid transiting the Red Sea.” But that’s not always possible.

A tanker company, Mr. Barstad said, is just a “taxi service” at the beck and call of clients like major oil companies and trading firms. Once the journey has begun, the captain or owner can’t suddenly decide to go around Africa instead of going through the Suez Canal without a very strong reason.

To redirect a ship already underway, “it has to be a warlike situation,” he said. “It is not a warlike situation right now — although to outsiders it might look like that.”

Mr. Barstad said he figured the chances of one of his ships being targeted by drones or missiles were fairly low because of the large numbers of ships still passing through the area. Also, he said, his company has had no recent history of dealing with Israel, making it less of a target for the Houthis, who are allies of Hamas.

He also finds some comfort in the coalition’s growing naval presence in the area, and having armed guards on board his ships.

Overall, flows of oil and refined products like diesel and gasoline through the Suez Canal dropped about 40 percent in December compared with October, said Viktor Katona, an analyst at Kpler, a firm that tracks shipping.

The petroleum industry is gradually adjusting to the heightened dangers. Some tankers are going around Africa. Others are taking cargoes to Asia. A surge of U.S. exports of diesel fuel and other refined products is helping Europe compensate for reduced flows from India and the Middle East.

That fairly smooth shift is one reason that the menace of the Houthis has had such little impact on energy prices. The price of Brent crude, now about $77 a barrel, is slightly lower than it was when Hamas fighters burst into Israel on Oct. 7, touching off its war in Gaza. At the same time, European natural gas prices have also dropped substantially.

While the Suez Canal may be important, there are alternatives. The largest crude oil tankers have always tended to stay away from the canal because of their massiveness, and so the current situation doesn’t represent much change. While the owners of some liquefied natural gas carriers have decided to temporarily keep their vessels out of the Suez Canal, those from Qatar, a key supplier of Europe, have continued to use the Egyptian route, perhaps figuring that the Houthis will not target a shipowner close to Hamas. As a result, European natural gas prices “have more been weighed down by a mild winter so far,” said Laura Page, a liquefied natural gas analyst at Kpler.

Shipping industry insiders figure that Russia, which sends large volumes of oil through the canal, is also likely to be immune to attacks. “Given Russia’s relations with Iran, it is very unlikely they will be targeted,” said Jonathan Chappell, senior managing director for surface and marine transportation equities at Evercore ISI, an investment bank in New York.

Above all, what has helped stave off panic is a sense in the markets that the world has plenty of oil and natural gas.

“The market is not worried about supply risks,” said Richard Bronze, head of geopolitics at Energy Aspects, a research firm. “It will take a lot to re-establish a sustained rally” in oil prices, he added.