• Red Sea shipping slows as security risks cut vessel traffic

Federal Government has commenced the payment of outstanding debts estimated at between N60 and N70 billion owed to independent petroleum marketers, a move expected to ease liquidity challenges in the downstream sector and improve fuel distribution across the country

The development came as global crude oil prices plunged by more than eight per cent yesterday following signs of de-escalation in the conflict between the United States and Iran, reducing fears of supply disruptions that had pushed Brent crude above $100 per barrel in recent weeks.

Speaking on the debt repayment, President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Elijah Shettima, said marketers had started receiving payment alerts, although the amounts paid so far hadnot yet made a significant impact.

According to him, the leadership of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had engaged stakeholders shortly after assuming office and sought their views on key issues affecting the industry.

Shettima expressed confidence in the current management of the Authority, describing it as experienced and knowledgeable about the oil and gas industry.

“Our major appeal is for the Authority to clear the outstanding debts owed to independent petroleum marketers. If these debts are settled, it will go a long way in helping them return to full operations,” he said.

He noted that many marketers had been unable to operate optimally because of the unpaid debts, stressing that the financial burden had weakened their businesses.
According to him, the total outstanding debt is estimated at between N60 and N70 billion.

“We have noticed that payments have started, which is encouraging. However, based on what we have seen so far, the amount released is not sufficient to make a meaningful impact. We have received payment notifications and are waiting to confirm the exact amounts credited,” Shettima added.

The marketers also urged the government to improve access to petroleum products by allowing independent marketers to purchase directly from suppliers instead of relying on third-party intermediaries.

According to the association, direct access to products would reduce costs, improve efficiency and create a more competitive and predictable downstream petroleum market.

Meanwhile, the international oil market recorded a sharp reversal after the United States and Iran signalled a temporary halt to hostilities following nearly two weeks of escalating tensions.

At the time of filing this report, Brent crude was trading at $88.65 per barrel, down 8.65 per cent, while U.S. West
Texas Intermediate (WTI) crude fell 6.95 per cent to $82.36 per barrel.

The decline followed indications from Washington that it would temporarily suspend its bombing campaign against Iran to allow room for diplomacy.

However, Commercial shipping through the Bab el-Mandeb Strait has declined sharply over the past three days as heightened security concerns in the Red Sea continue to disrupt maritime trade, according to the latest S&P Global Market Intelligence report.

The report showed that vessel crossings through the strategic waterway averaged 31 per day over the past three days, down from an average of 43 per day during the first half of July. Traffic through the Strait of Hormuz also eased, averaging 17 vessel crossings per day during the same period.

The slowdown comes amid renewed security threats in the region. The United Kingdom Maritime Trade Operations (UKMTO) reported two separate incidents involving commercial vessels, including a tanker in the Gulf of Oman that encountered military forces and another tanker in the Southern Red Sea that observed a projectile impact near the vessel.

The Houthis also claimed responsibility for drone and missile attacks on Saudi Aramco facilities in Jizan and Yanbu, including the 400,000-barrels-per-day Jizan refinery, further heightening concerns over the safety of commercial shipping.

S&P Global noted that several major insurers have suspended war-risk cargo cover for Saudi-linked vessels transiting the Red Sea, raising fears that insurance restrictions could further affect regional trade.

Despite the risks, Saudi-linked vessels accounted for 24 per cent of Bab el-Mandeb transits during the three days, recovering from 13 per cent immediately after the Houthis announced a blockade of Saudi ports on July 20.

The report also found that shipping companies are adopting different strategies to reduce exposure to the conflict. While some vessels continue to transit the Red Sea while avoiding Saudi ports, others are bypassing the route entirely and sailing around the Cape of Good Hope, significantly increasing voyage times.

Meanwhile, traffic through the Strait of Hormuz remained dominated by Iranian-linked vessels, although overall transit volumes declined from the previous week.

S&P Global said the easing followed a temporary pause in military strikes between the United States and Iran, but warned that shipping activity in both the Red Sea and the Strait of Hormuz is likely to remain volatile until a lasting diplomatic agreement is reached.