Why did oil tankers return to the Suez Canal despite ongoing security threats in the Red Sea?

The return of traffic is highly selective, driven primarily by operators carrying cargoes with lower perceived risk profiles, such as Russian, Chinese, or Iranian-affiliated vessels. Additionally, the massive financial savings of saving up to two weeks of travel time around Africa outweigh the high war-risk insurance premiums for these specific charterers.

How does this surge in Suez Canal transits affect global oil prices?

By shortening transit times between producers in the Middle East and consumers in Europe, the recovery in canal traffic increases the immediate availability of crude, putting downward pressure on spot prices. It also reduces shipping ton-mile demand, which helps lower global tanker chartering costs.

Is this recovery in Suez Canal revenue sustainable for Egypt?

The sustainability of this revenue boost is highly precarious and entirely dependent on the geopolitical climate. Until a permanent diplomatic or military resolution secures the Bab-el-Mandeb strait for all international shipping, mainstream Western operators will continue to bypass the canal, keeping revenues well below historical averages.

Rigzone · June 10, 2026 (Jun 10) · 1 min read

Suez Canal Gets Oil Tanker Boost

Analysis

AI-assisted analysis · reviewed by Yuri Kan

The sudden nearly 30% surge in oil tanker transits through the Suez Canal in April marks a critical, albeit temporary, stabilization of global crude flows following months of severe geopolitical disruptions. While the Red Sea security crisis previously forced massive diversions around Africa's Cape of Good Hope, this volume rebound suggests some operators are reassessing risk tolerances or utilizing specialized convoy arrangements to secure shorter transit times. This recovery in transit activity has provided a vital fiscal lifeline to the Egyptian government, pushing canal revenues to their highest levels since the beginning of 2024.

Key Facts

Oil tanker transits through the Suez Canal experienced a month-on-month increase of approximately 30% during April 2024.
The surge in maritime traffic drove total Suez Canal transit revenues to their highest monthly level since early 2024, easing pressure on Egypt's foreign currency reserves.
The volume increase occurred despite ongoing security threats in the Bab-el-Mandeb strait and the wider Red Sea region from Houthi militant attacks.
The rebound in tanker traffic primarily involved state-owned operators and vessels carrying Russian, Iranian, or Chinese-affiliated crude cargoes that perceive lower risk of targeting.
Prior to this April recovery, Suez Canal transit volumes had plummeted by over 50% from their late 2023 peaks, forcing global shipping to reroute around the Cape of Good Hope.
The increased transit activity has temporarily reduced the average ton-mile demand for tankers servicing East-West trade routes, slightly easing global dirty tanker charter rates.

Background & Context

The Suez Canal is one of the world's most critical maritime chokepoints, historically accounting for roughly 12% of global trade and nearly 10% of seaborne oil and refined product shipments. Following the escalation of the Israel-Hamas conflict in late 2023, Yemen-based Houthi rebels initiated drone and missile attacks on commercial vessels in the Red Sea, forcing major shipping lines and oil majors to bypass the canal entirely. This mass diversion added 10 to 14 days to voyages between Asia and Europe, severely inflating shipping costs, insurance premiums, and global ton-mile demand. Egypt, which relies heavily on Suez Canal fees for foreign currency, suffered a devastating drop in national revenue prior to this April uptick.

Market Impact

This traffic surge indicates a bifurcated shipping market where certain operators, particularly those transporting non-Western sanctioned oil or utilizing shadow fleets, are willing to brave the Red Sea to capture high arbitrage margins. For global oil markets, the partial return of tankers to the Suez route improves supply chain efficiency and reduces the volume of oil tied up in 'floating storage' on extended voyages around Africa. However, major Western oil companies (such as BP and Shell) are likely to maintain their risk-averse stance, keeping the shipping market divided. For Egypt, the revenue bump offers temporary economic relief, but long-term fiscal stability remains hostage to regional security dynamics.

What to Watch

Market observers should monitor whether this April volume spike represents a sustained trend or a temporary fluctuation driven by specific state-backed cargo movements. Key indicators to watch include changes in war-risk insurance premiums for Red Sea transits and the deployment of international naval escorts under Operation Prosperity Guardian. Any escalation in regional military activity will likely reverse these gains immediately, sending tankers back to the Cape of Good Hope route.

Why This Matters for Cyprus

While Cyprus does not produce oil, the stabilization of Suez Canal traffic directly impacts the Eastern Mediterranean's maritime logistics, bunker fuel markets, and the security of refined product imports to the island. Furthermore, as Cyprus positions itself as a future natural gas exporter, the safety and viability of the Suez Canal remain central to the long-term feasibility of shipping regional LNG to lucrative Asian markets.

Frequently Asked Questions

Why did oil tankers return to the Suez Canal despite ongoing security threats in the Red Sea?: The return of traffic is highly selective, driven primarily by operators carrying cargoes with lower perceived risk profiles, such as Russian, Chinese, or Iranian-affiliated vessels. Additionally, the massive financial savings of saving up to two weeks of travel time around Africa outweigh the high war-risk insurance premiums for these specific charterers.
How does this surge in Suez Canal transits affect global oil prices?: By shortening transit times between producers in the Middle East and consumers in Europe, the recovery in canal traffic increases the immediate availability of crude, putting downward pressure on spot prices. It also reduces shipping ton-mile demand, which helps lower global tanker chartering costs.
Is this recovery in Suez Canal revenue sustainable for Egypt?: The sustainability of this revenue boost is highly precarious and entirely dependent on the geopolitical climate. Until a permanent diplomatic or military resolution secures the Bab-el-Mandeb strait for all international shipping, mainstream Western operators will continue to bypass the canal, keeping revenues well below historical averages.

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