Oil Prices Soars, As Giant Container Ship Blocks Suez Canal

Crude oil prices surged by about 2% on Friday morning as marketers start panic buying over fear that stranded giant container ship blocking the Suez Canal could take weeks before it gets evacuated.

According to Lloyd’s List, the stranded mega-container ship is holding up an estimated $400 million an hour in trade, based on the estimated value of goods that are moved through the Suez Canal daily.

Moving on, the black liquid hydrocarbon still heads for a third consecutive weekly decline on growing concerns of the third wave of the COVID-19 brouhaha.

Crude Oil Prices Soars Higher, As Giant Container Ship Blocks Suez Canal

Osama Rabie, Chairman of the Suez Canal Authority, monitors the situation near stranded container ship Ever Given, one of the world’s largest container ships, after it ran aground, in Suez Canal, Egypt March 25, 2021. Suez Canal Authority/Handout via REUTERS

Presently, Brent crude rallied by 1.8%, to trade at $63.04 a barrel after losing about 4% on Thursday.

READ: Crude Oil Prices Remain Shaking As Oil Traders Grow In Doubts

The major oil benchmark is on track for a moderate weekly loss, following a more than 6% drop in the past week.
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics highlighted key macros that could weigh on oil prices in the midterm:

“The Suez Canal blockage’s transitory nature gave way to general nervousness around rising COVID -19 cases in Europe, India, and Brazil.

“And with an enduring safe- haven bid under the US dollar continuing to pressure oil prices, eventually, the trap door sprung and triggered a ferocious sell-off.

“And while sentiment was thrown an economic lifeline in the form of quickly repairing US job markets, it did provide a soft bed, but the bearish sentiment seemed to be winning out as the bounce was unconvincing.”

What to expect: Oil pundits anticipate that the reimposition of lockdowns in Europe would weigh more on oil prices as the resurgence of COVID-19 in hotspots worldwide does little to improve the prospect of regional travel and leisure sectors.