[040913.EN.BIZ] Muslim Strife Rises, Threatening Suez Canal, Oil From Other Nations

STRIFE in the Middle East and North Africa have escalated faster than anticipated, suggesting rising war risk will not abate soon and arousing fears of major oil shipment disruptions, reports London's Tanker Operator.

Disruptions would not be limited to crude oil movements and would impact a range of trades and vessel classes and tighten global tonnage availability, said the report.

Concern is greatest in Egypt, which governs the Suez Canal, according to a report from New York-based marine consultancy, which expressed concern for tankers throughout the from Libya to Syria and Iraq.

"At present, Egypt is providing 80,000 troops to ensure that security remains tight around the Suez Canal," said the report.

"Tempers have been flared during what is traditionally a time of unity throughout the region while political allies around the world are starting to re-evaluate their positions as a result of these developments," said the McQuilling Services report on world "hot spots".

The US Energy Information Administration (EIA) said the Mideast still accounts for 35 per cent of the world's oil output and the Suez Canal for seven per cent and the Sumed pipeline for 13 per cent of sea borne trade of oil and LNG in 2012.

According to Suez Canal Authority, around 1.4 million barrels per day of crude oil transited the Suez Canal in 2012, while the Sumed pipeline pumped 2.4 million barrels per day from the Red Sea to the Mediterranean.

"As the situation in Egypt has the potential to worsen, the disputes could move closer towards these installations. Potential threats include sabotage to the pipeline, industrial action, or any degree of disruption to transportation activity at the Suez Canal," said the report.

Although Syria's role in the energy markets is of little significance, a serious conflict in the country has the potential to wreak havoc and inflame other regional tensions, McQuilling warned.

In Libya, there was a drastic fall in oil output, but it has been back to pre-war levels of 1.6 million barrels per day. Since January, however, the country appears to be in renewed conflict, leading to a steady disruption of operations at ports, refineries and oil fields. Reports from Libya's National Oil Company (NOC) indicate that the country's oil production could fall to 200,000 barrels per day.

McQuilling assumes 800,000 barrels per day of crude goes through the Suez Canal to North America and the balance around the Cape of Good Hope. For Europe, the consultancy estimated that 1.5 million barrels per day currently transits the canal.

If there were any disruptions to these canal transits, an additional 35 very large crude carriers (VLCC) would be required, under the assumption of a round trip voyage at 13 knots and five port days.

In Iraq, continued strikes on pipeline infrastructure are reducing export volumes through Kirkuk in the north of the country.

Source : HKSG, 03.09.13.