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Even as Suez Canal is Cleared, Oil Ends Higher

On Monday, the Suez Canal was back to action, the oil futures ended higher by shaking off earlier gains as traders are expecting shipping delays to persist. Although the Ever Given has been freed in the Suez Canal, the shipping delays will take days to recover. Nearly a week ago, the ship had run aground, blocking global trade goods flow through the crucial waterway, including the crude oil.

James Williams, an energy economist at WTRG Economics, said, “The release of the tanker frees the bottleneck allowing awaiting oil and petroleum products to pass through, but there will still be a delay in their arrival.” He also said that many of the empty vessels are returning to Europe to pick up cargo. There can be congestion in the European ports for a while as well.

Williams also feels that the freight charges should normalize in a few weeks, and a bit of downward pressure can be seen on crude and product prices. On Monday, the Suez Canal Authority announced that the Ever Given, the container ship, was successfully back in motion. The vessel was moving to an anchor point northwards, and the shipping traffic began to move Monday afternoon. The Wall Street Journal reported that over 360 boats were waiting to pass through the canal.

An oil Markets analyst at Rystad Energy, Louise Dickson, said, “due to the large number of vessels that have accumulated, it could still be days or weeks until the canal is fully back to normal operations. Some leftover downstream ripple effects should be expected in the meantime.”

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