The Red Sea attacks are throwing supply chains into chaos — but US oil exports appear to be benefiting from them

The Galaxy Leader cargo ship is escorted by Houthi boats in the Red Sea in this photo released November 20, 2023.

Houthi Military Media/Handout

• International oil buyers are purchasing more US shale amid attacks on commercial ships in the Red Sea, said a Mizuho analyst.
• US petroleum exports rose by 35% on-week to nearly 5.3 million barrels a day for the week ended December 29.
• Oil prices have not been getting much of a boost from the Red Sea attacks.

The ongoing attacks on commercial ships in the Red Sea by Iran-backed Houthi rebels are causing chaos for the world's supply chains — but American oil exports appear to be benefiting from them.

That's because international demand has shifted to ample US shale oil supply — which is the "safer and cheaper way to procure supply, especially for EU customers," Robert Yawger, the executive director for energy futures at Mizuho Securities USA, wrote in a note on Thursday, per MarketWatch.

Due to the attacks, many ships are rerouting from the Red Sea — which connects to the Suez Canal, a vital trade link between Asia and Europe — to the Cape of Good Hope in South Africa, but this makes journeys longer and more expensive.

So, many buyers appear to be simply purchasing oil from the US instead of the Middle East. US petroleum exports rose by 35% on-week to nearly 5.3 million barrels a day for the week ended December 29, according to the US Energy Information Administration. This is the first time US exports have spiked since the Houthi started their Red Sea attacks in mid November.

Yawger expects US petroleum exports to hold above the 5 million barrels a day level in the coming weeks amid intensifying geopolitical tensions.

The US has spearheaded a multinational operation to protect shipping lanes around the Red Sea, but many shipping companies are still avoiding the region and are warning of major disruptions to their schedules.

For oil consumers at least, there's a simple solution to the problem, wrote Yawger.

"Forget about the Houthis/Iranian menace in the Red Sea," he wrote. "You don't need a US Navy escort from danger — just a nice, clean two- to- four-week round-trip journey to the US."

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