Oil, Gas Shipments Drive Suez Canal Record-High Revenues
The head of Egypt’s Suez Canal Authority says the canal received record high revenues of more than $620 million dollars during April. Analysts say that’s partly due to Persian Gulf countries sending more oil and gas to Europe, as the Russia-Ukraine conflict reduces exports from those two countries.
Egypt’s Suez Canal Authority reported record revenues of $629 million for April 2022 with 1,929 ships passing through the canal, representing a 6.3% rise in traffic over April of last year.
Canal Authority head Osama Rabieh told Egyptian TV Tuesday that the Russia-Ukraine conflict weighed on the canal’s revenues in April, but that the “positive effects were more powerful than the negative.”
He says that he knew that the Russia-Ukraine conflict would have both positive and negative repercussions on Suez Canal revenues after the conflict started, but that fortunately the positive outweighed the negative and an increase in oil and gas shipments from the Gulf to Europe has outweighed the decrease in traffic from Russia and Ukraine via the canal.
Egyptian political sociologist Said Sadek tells VOA that the Ukraine conflict had a clear “impact on gas supplies passing through the Suez Canal (as) Europe attempted to wean itself from Russian gas and the Gulf states — particularly Qatar — began pumping more liquified natural gas (LNG) via tankers crossing the canal.”
Sadek also points out that with tensions rising across the world and food, fuel and insurance prices increasing, “it was natural Suez Canal tariffs would also rise.” The Suez Canal Authority has raised rates, year-over-year, since 2021.
Paul Sullivan, a Washington-based Middle East analyst, notes that oil and gas traffic from the Gulf will be increasingly important as the conflict continues and Europe needs to diversify its oil and gas sources
“As the situation in Europe continues to play out, what I would expect is that more LNG traffic would be going through the (Suez) Canal from even farther locales, because right now there’s a debate in Europe about cutting off gas (from Russia) entirely, and the Russians are constantly threatening to do that, and also oil coming in from the Gulf and elsewhere is obviously going to be increasingly important,” he said.
Sullivan adds that both Saudi Arabia and the United Arab Emirates have excess pumping capacity, and he thinks it is likely that they “will pump more oil as the market gets tighter due to the Russia-Ukraine conflict, going forward.” He thinks that Saudi Arabia is now holding off production increases for business reasons rather than political reasons, as some analysts suggest.
Khattar Abou Diab, who teaches political science at the University of Paris, tells VOA that the Russia-Ukraine conflict “has contributed to the increase of oil and gas flow through the Suez Canal to Europe, but also the gradual end of the COVID-19 crisis is also revitalizing many supply lines across the world, increasing container traffic through the canal, as well.”
Abou Diab also points out that the U.S. has “succeeded in persuading countries like Qatar and Australia to increase gas production in the direction of Europe and away from Asia,” further adding to Suez Canal traffic.