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Thursday, February 22, 2024

Norway can profit on Red Sea attacks

The price of oil shot up and so did shipping rates and the value of shipping companies on Friday, after the US and Great Britain retaliated against attacks on commercial vessels in the Red Sea during the night. Norway’s large oil and shipping industries can thus profit on the new conflict, and Norwegian officials were tipped in advance.

Foreign Minister Espen Barth Eide was made aware of planned US and British strikes against the Houthi militial in Yemen. He supports efforts to keep the Red Sea and Suez Canal open to international merchant shipping. PHOTO: KMD/Martin Lerberg Fossum

Norwegian Foreign Minister Espen Barth Eide confirmed that the nighttime attacks against Houthi militia targets in Yemen came as no surprise. “We didn’t know the attacks would come during the night, but we were aware it was an option they’d planned for,” Eide told reporters Friday afternoon.

He noted how the attacks were backed by a UN Security Council resolution two days ago. It stated that “there would be consequences” if the Houthis in Yemen didn’t halt their recent attacks on vessels sailing along Yemen’s Red Sea coast on routes to or from the Suez Canal. The Houthis, who support Palestinians under attack by Israel in Gaza, have claimed they only target vessels heading for or with ties to Israel, but others have been hit as well.

Eide stressed that Norwegian officials had also been in direct contact with the militia in Yemen: “Norway has contributed towards sending the message,” Eide said, that ongoing attacks would spark a reaction.

“Norway is a shipping nation,” Eide added, claiming that efforts must be made to keep the Red Sea and Suez Canal open for merchant shipping. He noted how the Houthi attacks have themselves come as a response to Israel’s constant attacks on Palestinians in Gaza that already have killed more than 20,000 civilians, many of them women and children, and destroyed an estimated 70 percent of Gaza’s housing.

“We must do everything we can to solve that conflict,” said Eide, who along with the Norwegian government has claimed that Israel has “gone too far” with its own retaliation for Gaza’s Hamas attacks on Israeli civilians in October. Fears are rising that Israel’s war on Hamas will spread throughout the Middle East. “At the same time it’s unacceptable that there are regular attacks on shipping traffic through the Red Sea,” Eide said.

Norway has experience of its own from military operations to protect merchant marine ships in the Red Sea and Gulf of Aden, like here in 2013. PHOTO: Forsvaret/Torbjørn Kjosvold

The US and British attacks on Friday set off mass demonstrations in Yemen, where the US was branded as “the devil” and the attacks themselves described as terrorism. International shipping companies, including many in Norway, feel like innocent targets and many have started sailing all around Africa to avoid the Red Sea.

Others keen to continue sailing through Suez welcome the US and British response, especially shipowners whose own vessels have already been hit like the Strinda that’s in the fleet of Norway’s J Ludwig Mowinckels Rederi. It wound up in the Houthis’ firing line in December, leaving it with a gaping hole right over its oil tanks.

“It was a very dramatic situation,” Geir Belsnes, managing director of Mowinckels, told DN.  “We were in a situation where our ship and its entire crew was attacked by rockets and drones.” Fire broke out on board the tanker but no lives were lost, and the crew managed to keep the ship from being forced to dock in Yemen.

Hansa Tankers Management in Bergen has also had ships in the area and was well aware of the Houthis. Company officials were surprised, however, when they began to attack civilian international shipping, both Norwegian ships and others.

“That was new,” Hans Solberg of Hansa Tankers Management in Bergen told newspaper Dagens Næringsliv (DN) on Friday. He seemed relieved that the US and Britain fought back after diplomatic contact had little or no effect: “It’s always wrong to say that a war is good, but there’s nothing else to help.”

Profits loom for shipping and oil
Nearly 15 percent of global marine trade passes through the narrow entrance to the Red Sea between Djibouti and Yemen and more vessels were targeted by the Houthis’ drones and missiles earlier this week. Three Norwegian ships have been hit so far, ironically enough given Norway’s criticism of Israel’s war on the Palestinians.

DN reported how the tension in the Middle East has prompted investors to buy shares in both shipping- and oil companies, as both shipping rates and the price of oil jumped after Friday’s attacks. A barrel of Norway’s North Sea crude oil was price at more than USD 80 Friday after.

“In the short term, an escalation in the Middle East will be positive for shipping shares,” analyst Kristoffer Barth Skeie at Oslo-based Arctic Securities told DN. Large tanker shipping firm Frontline gained as much as 7.28 percent on Friday. Container shipping companies are already opting to sail around Africa and Skeie expects more will do the same, boosting their revenues, but also the price of whatever’s on board. Consumers were already being warned to expect delays on the delivery of goods.

The value of shares in oil companies Equinor, Aker BP and Vår Energi also rose Friday afternoon, since their main product will also likely be in more demand. Oil prices later dipped, but are expected to remain volatile.

Norway became a target of international criticism after its oil and gas industry profited enormously on Russia’s invasion of Ukraine. Now it can profit again on all the hostilities in the Middle East, but government officials remain keen to seek peace in the region. Foreign Minister Eide and Prime Minister Jonas Gahr Støre continue to call for an end to Israel’s incessant bombing of Gaza, arguing once again in favour of a two-state solution.

NewsinEnglish.no/Nina Berglund

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