Oil and Water

Rabobank Global Strategist Michael Every began a Tuesday note aptly named "Oil and Water" by acknowledging the value of "oil and water (routes)" in an inflationary, multipolar world: "Especially as Yemen’s Houthis have attacked ships carrying cargo via the Red Sea or Arabian Gulf. Welcome to how the world used to work before British, then US, naval supremacy. This is what a multipolar world is going to look like..."

Michael Every laments that it’s only reactive to attacks on shipping, not proactive at the source: "That maintains the risk for more shipping to divert from Suez round the Cape of Good Hope: if so, global carriers would only be able to make 3-4 Asia-Europe roundtrips per year, not 4-5, a massive structural drop in supply capacity. The Financial Times warns , including the drought in Panama cutting passages there and geopolitical risk threatening the Suez."

The Rabobank report appropriately followed an article out of the FT titled ‘Global pre-Christmas trade at risk from twin canal crises’, which warned of a synergistic supply shock from both the Panama drought and, of course, ongoing geopolitical risks near the Suez.

The FT notes that "Switching routes from Panama to Suez adds five days to journeys between New York and Shanghai... If more shipowners avoid the Suez Canal and take the long route around Africa’s Cape of Good Hope for journeys between the same cities, this could add an additional six days to their journey."

At least 167 ships crossed the canal during the first week of December this year, compared with 238 last year. Authorities have for the first time reduced the number of crossings, which by February will be limited to only 18 ships a day.

Multiple shipowners have already applied surcharges of hundreds of dollars per container for exporters sending goods through Panama, as the cost of using the canal increased by up to millions of dollars per ship passage. Hapag-Lloyd announced an upcoming “war risk surcharge” of up to $80 for all shipments to and from Israel.

🇺🇸🇾🇪📝 It really is incredible watching the U.S. expose its top assets in this reckless of a manner.

All of their logistics are exposed here, and the Houthis have just demonstrated that ASBMs work. That should be ringing alarm bells in Washington, especially given the USN already concedes the Houthis have one of the best Anti-Ship missile forces in the world.

🇮🇷🇺🇸📝 Can we also acknowledge how masterfully Iran is working its proxies?

The only two American carriers in the region are now tied down either protecting Israel or protecting shipping on the other side of the Arabian peninsula. The only American combat power now directly facing Iran is in fixed positions that would die in the first 30 minutes of an actual war by thousands of Iranian ballistic missiles.

🇺🇦 The deputy head of the State Special Transport Service of Ukraine, Colonel Viktor Zhigunov, and three of his subordinates died in the accident, reports UkroSMI.