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Clarkson's Highlights Potential Cape of Good Hope Cost Benefit

OIL

If Red Sea tensions persist long term, the increased insurance premium may make more economic sense to reroute via the Cape of Good Hope according to Clarksons Securities.

  • It flagged the example of a $60mn, 10-year old LR2 passing the Red Sea paying $300k in insurance plus $500k Suez transit fee vs an extra 12-day voyage around the Cape of Good Hope at an extra $250k fuel burned.
  • “As a result, shipowners and charterers may find that rerouting around Africa is more cost-effective than incurring the combined costs of Suez Canal transit fees and insurance premiums.”
  • It did however warn of market backwardation reducing the move because of the potential cargo value reduction.
  • Oil brokerage flagged that over 200 or 4% of the global tanker fleet is caught up in Red Sea escalations in a Sunday note, rising to 5% for Suezmax and Aframax/LR2 class.
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