Container Bytes #51: Middle East Crude Rebounds, Premier Alliance's Red Sea Return, and Golden Week Shifts

So there are some recent estimates that put Middle East crude oil exports almost back to pre-war levels, and crude prices are coming down a bit too.

What does this mean for bunker and jet fuel?

Yeah, so, um, some of that increase is actually coming through the Strait of Hormuz, so it seems that the US maybe is getting better at escorting vessels.

There are a lot of vessels crossing, you know, with their, uh, transponders off, with their AIS off.

They're called kind of dark transits, and there seems to be increases and improvement on, on that front, and there are lots of o- other, uh, alternatives as well, pipelines to, um, the Saudi Arabia and then via the Red Sea.

So there seems to be an increase in, uh, volumes of crude and by, by certain estimates.

And we, as you said, we do see, um, crude rates coming down a little bit.

Not as much as maybe you would expect if we're kind of back to almost, uh, baseline levels, but coming down a little bit.

What does that mean for other types of fuels is, uh, kind of a different story.

So first of all, it will take time for those actual volumes to reach where they need to get to and then be refined.

So sometimes you, well, you'll see a lag in terms of, um, crude levels and crude prices and, um, refined, uh, prices.

And the other part is this, if this is sustained.

So really just in the last couple days, we've seen, uh, an increase in attacks on vessels in, in the Hormuz, and we know there have been attempts to disrupt the alternative, like the pipeline for, for Saudi Arabia and things like that.

So that's the other kind of wild card.

When we see other fuel types, like the big problems there are in diesel right now, that is more in terms of, um, damaged infrastructure, where a lot of diesel was refined in the Middle East and then exported, which isn't so much the case for, for bunker and jet fuel, so it's a little bit of a different story.

One kind of related piece of all this to container is that we, we were just talking about this pipeline to, uh, you know, out of the Gulf to, um, the Red Sea coast, uh, via this pipeline that belongs to Saudi Arabia, and this is kind of related to the conflict between the Houthis and, and the Saudis.

The Houthis have been, um, you know, trying to disrupt Saudi, this Saudi alternative of, of tankers going through the Red Sea and then through the southern Red Sea and, and off, uh, into Asia by attacking Saudi vessels there.

There's been developments there.

Kind of Saudi-backed forces in Yemen are now trying to retake territory on the coast that was recently captured by the, by the Houthis and being used, you know, to, uh, to further threaten Red Sea traffic.

But even with all this going on, to finally get back to container, even with all this going on, we still see container carriers continuing to take steps back to the Red Sea, um, gradually.

And the latest, um, update there is that the Premier Alliance, which had been the last of the three alliances plus MSC still not going back to the Red Sea now announced that they will start sending some vessels, uh, in October.

So this seems to be, you know, kind of gradual and steady progress towards a, a full return to the Red Sea for the container market nonetheless.