Amid Maritime Concerns, Suez is Taking in Larger Vessels

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--The arrival of larger-class vessels from French shipping company CMA CGM (Marseille, France) shows the Suez Canal is open for business, officials said amid concerns about risks from the Iran-Israel conflict.

The French company's container ship, Osiris, with 154,000 in gross tonnage, moved through the channel to the Port of Alexandria in Egypt on Wednesday. Authorities at Suez said this is the first large container ship to transit the canal since March 2024, following "regional challenges."

About 10% of the world's waterborne trade in crude oil and liquefied natural gas moves through the Bab el-Mandeb Strait between Yemen and Djibouti on the way to the Suez Canal.

Admiral Ossama Rabiee, the chairman of the Suez Canal Authority, added that container ships with net tonnage greater than 130,000 tons can get a 15% discount on transit fees, which he said enhances the waterway's position as "the best maritime route for mega ships despite regional and economic challenges."

Attacks from the Houthi rebel group, which enjoys weapons support from Iran, have disrupted maritime traffic in the region. As recently as June 8, the U.K. Maritime Trade Operations (UKMTO) office warned that mariners were advised to exercise "extreme caution" when travelling near the port of al-Hudaydah on Yemen's western shores of the Red Sea.

Maritime risks escalated after Israeli forces on Friday launched a pre-emptive strike on Iran, destroying much of the above-ground infrastructure supporting its nuclear research program and curtailing the processing capacity at the Tabriz refinery in Iran. The facility, with a nameplate capacity of 115,000 barrels per day (BBL/d), saw storage tanks hit by Israeli missiles earlier this week. Subscribers to Industrial Info's Global Market Intelligence (GMI) Refining Plant Database can click here for the plant profile.

IIR Energy finds the impact on the energy sector has been lopsided so far, though Iran's infrastructure is far more expansive than Israel's and thus has more targets. Offshore, Dryad Global, a maritime risk consultancy, said it saw traffic through the Persian Gulf and the Strait of Hormuz fall by 25% to June 15, three days after the Israeli strikes.

Meanwhile, electronic interference that could disrupt a vessel's AIS signal, a location tracker, has been ongoing since at least May. United Kingdon Maritime Trade Operations said earlier this week that the risk of misidentifying a vessel as Western is high as a result.

Avoiding regional waters is difficult and costly. It takes about three weeks to move from the Persian Gulf to the Amsterdam-Rotterdam-Antwerp trading hub (ARA) through the Suez Canal. Taking the long way around the Cape of Good Hope off the coast of South Africa can take a little more than a month.

Apart from the disruptions to refineries, there's been no physical impact on the energy sector, though the conflict has added a significant risk premium to the price of crude oil. The price for Brent crude oil, the global benchmark, had threatened to drop into the $50 range early this year amid concerns that U.S. trade policies would undermine global growth. That concern remains, though risk has pushed Brent closer to $80 per barrel this week.

On Thursday, Israeli forces said they would double down on their attacks after Iranian missiles hit a hospital in southern Israel, wounding hundreds. Apart from infrastructure, Israel has threatened Iran's Supreme Leader, Ali Khamenei. In a sign of potential spill-over, Iran's Press TV reported the Iraqi Shiite cleric Ali al-Sistani has strongly condemned what he considered Israeli aggression.

The Israeli military arsenal outmatches Iran's, though only the United States has the bunker-busting bombs necessary to penetrate Iran's underground fortifications protecting its nuclear program. U.S. news magazine Newsweek reported that satellite imagery suggest the United States is moving its forces into the region for possible Israeli assistance.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).