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HomeTop Global NewsIsrael-Hamas war and rocket attacks lead oil tankers to unusual moves

Israel-Hamas war and rocket attacks lead oil tankers to unusual moves

Oil tankers in the Red Sea are taking unusual actions amid the Israel-Hamas war, shutting off their global tracking transponders — called Automatic Identification Systems (AIS) — in an effort to traverse the waters undetected.

“There’s been a big drop-off in tanker AIS signaling Israel as their destination,” said Homayoun Falakshahi, senior oil analyst at global trade intelligence firm Kpler. “In fact, we don’t see any crude-carrying tankers doing so at the moment.”

The moves to evade detection come as shipping lines are also being advised to wait further offshore with rocket attacks reported at the ports of Ashdod and Eilat in Israel.

“Vessels calling Israel are advised to apply ballistic protection measures,” global maritime risk management firm Ambrey wrote in a note to clients on Saturday after a series of rocket sirens at the Port of Ashdod. “In the event of a siren, crew members are advised to take shelter.”

Ballistic protection can include a section of the vessel that has armor or protective gear.

Falakshahi tells CNBC vessels are not only shutting off their tracking systems while traveling but also in port as they unload their crude or cargo.

He said data shows that the tanker Sea Galaxy discharged at the Port of Haifa on October 24 while having its AIS signal off. “This is unusual behavior and delays the information of a discharge,” Falakshahi said.

Israeli authorities have advised the global shipping community that they would be compensated for any war-related damages that occur within the country’s economic waters. War risk surcharges for cargo headed to Israel are now being added by some ocean carriers. So far, no reports of attacks on oil tankers have been reported.

Israel has closed the Port of Ashkelon, the country’s biggest oil-importing port, because of rocket attacks.  As a result of the war, activity at the Port of Ashdod has dropped dramatically, but the Port of Haifa which is located further north remains stable.

The Port of Ashdod is a major hub for potash and bromine exports from Israel. Potash is a key component in fertilizer. Bromine is a raw material used in textiles, pharmaceuticals, oil and gas, food and beverage making, energy generation, construction, and electronics. ICL Group, a major Israel-based manufacturing company that produces fertilizers, chemicals and metals for the agriculture, food and material sectors, provides around a third of global bromine supply.

According to CNBC Supply Chain data provider Everstream Analytics, the Port of Ashdod has become a transport linchpin for ICL Group in recent years. ICL has indicated the export of some chemical goods will likely be delayed even if local manufacturers keep operations running in the coming weeks.

“Rockets are regularly fired at the Port of Ashdod in southern Israel, the country’s second biggest port,” said Mirko Woitzik, global director at Everstream. Operations at Ashdod have also slowed down due to staffing shortages, with 10% of workers recruited into the Army, he added.

The number of waiting vessels on a daily basis has dropped at Port of Ashdod to below five since the outbreak of war compared to more than 15 on average before the war, according to Everstream.

“This suggests that container lines are avoiding the Port of Ashdod, and potentially relying more on the Port of Haifa instead,” Woitzik said.

Evergreen was the first ocean carrier to divert a vessel bound for the Port of Ashdod citing a “persisting unsafe situation” and declared force majeure. This is a significant declaration because if more vessels declare force majeure, it could impact Israel’s food supply. The ports of Ashdod and Haifa are the key ports for food imports. The country imports almost three times as much food and agriculture than exports. Key imports included live animals for meat, sugar, vegetable oils, grain, and feed.

At the Port of Haifa, the number of vessels is expected to rise as more ships are likely to divert to Haifa.

Recent rocket fire has tankers docking and discharging cargo at alternative ports. Last week, the Seaviolet called the Port of Eilat instead of its original destination, Ashkelon. Kpler tells CNBC its analysis suggests Israelis have reversed the Eilat-Ashkelon pipeline flow so that oil can get to Ashkelon, and then to the Ashdod and Haifa refineries, which are linked to Ashkelon via pipelines.

Falakshahi explained that due to Eilat’s location on the Red Sea, ships can circumvent the conflict-ridden region close to Gaza, passing through the Suez Canal and entering the Gulf of Aqaba.

“If this route is continued going forward, Israel could build its crude stocks again and feed its domestic refineries again, therefore preventing a potential energy crisis in the country, which has inventories filled up to levels covering up to about 50 days of domestic demand right now.”

Israel usually imports around 10-13 cargos of crude oil a month.

Last week, a long-range rocket was fired into Eilat and pierced the Iron Dome, according to an Ambrey note sent to clients, and it said the attack “indicates a change in Hamas’ operational activity, not only targeting closer ports and cities en masse but also specifically launching rockets at far away targets as the war nears the end of its third week.”

Oil prices have pulled back in recent trading even as tensions in Israel and Gaza lead to concerns about a disruption in global oil supplies.

Israel is reliant on crude oil imports to operate its refineries, said Andy Lipow, president of Lipow Oil Associates, and he is keeping an eye on the Ports of Haifa and Ashdod. If they close, the Port of Eilat will be the key one to watch, he said.

Other crude oil export terminals in the region that will be closely monitored are those that load tankers transiting through the Strait of Hormuz, Lipow said, which includes Ras Tanura in Saudi Arabia, Basra in Iraq, and Mina al-Ahmadi in Kuwait.

Another waterway Lipow is watching is the Port of Fujairah, which is located outside of the Strait of Hormuz, and is a major vessel bunkering (ship refueling) location in the Middle East.

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