Last week, the Houthis announced they would resume attacks on Israeli ships, and over the weekend the US military targeted Yemeni ports. Part of Trump's agenda seems aimed at restoring US dominance over global seaways, a contrast to perceived inaction during the Biden administration. The Houthis have dispersed their locations well, which allows them to continue their attacks despite the US naval presence. We'll need to see if the recent strikes make any difference, but immediate changes in vessel traffic through strategic choke points like the Suez Canal or the Bab-el-Mandeb Strait are unlikely.
Are we seeing any positive shifts in shipping or oil flows into China?
The tanker market has been sluggish overall since last year, even with geopolitical tensions and sanctions that should theoretically boost it. We do anticipate an increase in Chinese imports however over the next few months due to a drawdown in onshore inventories and steady refinery runs, despite low imports currently. This expectation could support the narrative of stronger Chinese demand coming soon.
How have OFAC sanctions impacted sanctioned vessels so far?
The targeted fleet included 183 vessels, particularly 143 tankers. Their utilization has plummeted, though a few still deliver into China, ignoring sanctions. This has meant that freight rates for Russian oil have surged due to reduced shipping capacity. The sanctions hit harder in the East, affecting high-value ESPO crude. Vessels not under sanctions are now busier, maintaining the flow of Russian crude, with freight rates rising to ensure sufficient supply. This dynamic continues to shift vessels between markets, responding to changes in sanctions and trade flows.