Oil prices are falling. Why India’s shipping costs are still soaring
Oil prices are easing after hopes of a pause in the US-Iran conflict, but the relief has yet to reach India’s shipping industry.
Freight costs remain elevated as vessels continue to avoid conflict-hit routes, reroute around longer sea lanes and face higher insurance premiums. The latest fall in shipping traffic through the Bab el-Mandeb Strait shows why the disruption to global maritime trade is far from over.
Only 11 commodity vessels crossed the Bab el-Mandeb on Sunday, the lowest level in months, according to shipping data from Kpler, as reported by Reuters. Traffic through the Strait of Hormuz also remained extremely weak, with fewer than 10 commodity vessels passing through daily over the weekend, despite a pause in US-Iran strikes.
That creates a sharp disconnect for India. Brent crude fell more than 5 per cent on Monday after the United States paused strikes on Iran, with hopes rising that diplomacy could prevent a further escalation of the conflict. But shipping markets are responding to a different calculation: whether it is safe, commercially viable and insurable to send a vessel through the region.
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