Shipping rates and oil prices jump on Suez block

The blockage in the Suez Canal has sent the cost of shipping cargo soaring.

Rates for oil product tankers have nearly doubled this week.

Vessels were diverted away from the vital waterway as a giant container ship remained wedged between both banks.

The 400-meter long Ever Given has been stuck since Tuesday (March 22).

Efforts are under way to free the vessel, although the process may take weeks.

Sal Mercogliano is a maritime historian:

"They'll start trying to offload water, ballast (material used to give stability to a vessel) oil, fuel. They'll bring some dredging equipment in. The canal has dredging equipment to maintain the canals depth, and they're doing the expansion of the canal, so they have dredging equipment there. But again, they have to be very careful about this. The vessel is hung up on the banks. The bow is basically in Asia, the stern's in Africa, and the middle is in the middle of the canal. And what you can't do is take a lot of weight off the ends and put a lot of what they call a 'sagging stress' on the vessel. You could conceivably crack the hull, cause an oil spill. But worse, catastrophically fracture the vessel in half."

Re-routing ships around southern Africa could pile about two more weeks onto journeys.

And mean more than 800 tonnes of extra fuel consumption for some tankers.

Fuel is a ship's single biggest cost, representing up to 60% of operating expenses.

More than 30 tankers have been waiting at either side of the canal to pass through, shipping data on Refinitiv showed.

Now traders are waiting to see what it all means for energy markets.

Some industry watchers say the impact of the delays will be mitigated by demand for crude oil and liquefied natural gas being in the low season.

But oil markets weren't so relaxed on Friday (March 26).

Prices reversed a sharp sell-off a day earlier, with U.S. and international benchmark prices up around 1.8% in morning trade.