OIL trade flows through the Suez Canal could be two-thirds lower by the end of January because of attacks by Iran-backed Houthis on commercial shipping in the Red Sea, according to the International Energy Agency’s latest oil market analysis.

About 7.2m barrels per day, or 10% of seaborne oil trade and 8% of liquefied natural gas was shipped via the Suez Canal and Red Sea, which connects Asia and the Middle East Gulf to northwest Europe, the UK and ports in the Mediterranean.

“Oil flows through the Suez Canal could decline to minimal levels,” the IEA said in its monthly oil report, published today.

“Even so, substantial volumes of oil continue to flow both into and out of the Red Sea, both through the canal and the Bab el Mandeb strait between Yemen and Ethiopia.”

Stena Bulk, Hafnia, Torm and Euronav had halted Red Sea transits while Shell, BP and Equinor had also reportedly suspended shipments, according to the report.

Diverting around the Cape of Good Hope added two weeks to voyages, delayed deliveries and raised risks of supply chain bottlenecks, and renewed inflationary pressures the report noted.

“The resulting build of oil in transit heightens tensions in already tight crude and product markets, notably for Middle East crude to the Atlantic Basin, for Russian crude to Asia and for middle distillates from the Middle East and India to Europe,” according to the report.

“A prolonged rerouting of commodity flows could affect European oil product prices.

“Export prices reflect those in Asia less the cost of shipping which would rise with the extended voyage time, while import prices constitute those in Asia plus shipping costs.

“Hence, naphtha and fuel oil export prices would be depressed while diesel and jet fuel import costs would rise. The Mediterranean markets could be heavily affected by the increase in shipping delays as Middle East crude swings from the Red Sea to the long-haul cape route.”

Some 32 attacks on ships by Houthis have been reported since mid-November, with a fourth US strike on targets in Yemen undertaken overnight.

Volumes of LNG and liquefied petroleum gas tracked on ships at sea were “holding close to all-time highs” amid Panama Canal and Red Sea diversions and record US exports, according to Vortexa.

The London-based data analytics provider tracked 18 tanker diversions from the Red Sea since strikes began on land-based Houthi targets last Thursday. A further 19 were awaiting transits.

No LNG carriers were shown transiting the area according to vessel-tracking data after Qatari deliveries to Europe were sent around the cape.

There had been a sharp drop in northbound and southbound transits via the strait of Bab el Mandeb since the retaliatory military action, according to the Vortexa report, published January 16.

The increased volumes of oil and gas at sea were reported at the same time as global oil demand growth slowed and supply rose, according to the IEA.

Record-setting output from the US, Brazil, Guyana and Canada would account for most of the 1.5m bpd in additional gobal supply over 2024, estimated at 103.5m bpd.

Global demand in 2024 is forecast 500,000 bpd lower, at 103m bpd.