The British company’s announcement came as Houthi fighters entered Yemen Targeting vessels operated by multiple companies, prompting many of them to take precautions. But BP was the first major oil company to stop shipping in the region.
Two graphs show why shipping companies stop routes in the Red Sea
“Due to the deteriorating security situation for shipping in the Red Sea, BP has decided to temporarily suspend all traffic through the Red Sea,” the company said in a statement. “We will keep this precautionary suspension under constant review, subject to evolving conditions in the region.”
Brent crude rose more than 2 percent to trade at around $78 a barrel after Monday’s announcement. Analysts warned that if other major oil companies also stopped shipping through the Red Sea, there would be profound implications for energy markets. Natural gas prices in Europe also rose sharply after BP’s move.
Who are the Houthis and why are they attacking ships in the Red Sea?
Without access to the Red Sea route, many ships had to go around Africa to reach their destinations, so they had to go through the Suez Canal to the Mediterranean.
Several shipping companies, including MSC, Maersk, CMA CGM, Hapag-Lloyd and Evergreen Group, have said they are avoiding the Suez Canal because militants target ships. The attacks are fueling concerns that supply chains for many industries could be disrupted as world leaders deliberate on options to secure shipping lanes.
On Friday, Houthi rebels claimed responsibility for attacks on two MSC ships. “The situation continues to deteriorate and concern for safety is increasing,” CMA CGM said in a statement on Saturday. “We advise all CMA CGM container ships in the area scheduled to transit through the Red Sea to reach safe areas and immediately cease transit in safe waters”
Evergreen made its announcement Monday morning, citing a “severely” escalating “war situation.” It said it would suspend all exports to and from Israel “until further notice”.