Gas Prices Could Climb Higher After Cargo Ship Blocks Suez Canal

One of the busiest shipping lanes in the world remains shut down after a massive container ship ran aground in the Suez Canal during a sandstorm earlier the week.

While crews have been working to free the Ever Given, which is as long as the Eiffel Tower is tall, over 150 ships have been stuck waiting for the canal to reopen. It could take weeks to free the Ever Given after salvage teams determined the vessel is too heavy to pull with all of its cargo.

Peter Berdowski, the CEO of Boskalis, whose sister company SMIT Salvage is running the salvage operation, told a Dutch TV station that crews will try to remove the fuel oil and ballast water first and then attempt to free it during high tide. If that is unsuccessful, they will have to unload all the cargo from the ship, a process which could take weeks to complete, he said according to CNN.

In the meantime, some ships have been diverted to another route, but that adds about one week to their travel time. As a result of the delays, the cost of many items could go up in the coming days and weeks.

According to Business Insider, the shutdown could cause gas prices to rise even higher. Gas prices have been increasing in recent weeks as demand shot up because more people are driving as an increasing number of states began lifting coronavirus restrictions.

About 14.5 million barrels of crude oil pass through the Suez Canal every day. 600,000 barrels go from the Middle East to the United States and Europe, while 850,000 barrels are shipped to Asia. With those shipments delayed, prices could be forced higher as countries struggle to keep up with the increased demand for gasoline.

The closure sent commodity prices higher as the price of Brent crude jumped by 4% on Wednesday. The price has come down a bit since then, but the longer the Suez Canal remains closed, the more likely the cost of gas will rise.

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