(JustPatriots.com)- Europe’s ongoing energy crisis and the subsequent increased demand for cargo ships to transport fuel have caused global shipping costs to skyrocket.
With Russia curtailing natural gas supplies to the region, Europe has been left with no choice but to import gas and oil from other places. With Europe relying on ships from more distant places, the vessels are tied up for longer periods than they normally were. According to Bloomberg, shipping experts say this has caused an increase in global freight prices.
For example, the cost of shipping oil from the United States to China is now at its highest level since 2020. Meanwhile, the cost of shipping naphtha petrochemical feedstock from the Middle East to Japan has doubled since March.
Complicating the problem is European utility companies parking liquified natural gas aboard cargo ships. Since the region’s shipping terminals are currently at full capacity, the utility companies are unable to move the supplies to onshore storage.
This practice of storing supplies on vessels off the coast is called “floating storage.” But the practice only compounds the shortage of vessels.
CEO Oystein Kalleklev of the shipowner Flex LNG Management AS told Bloomberg that floating storage is to be expected, however, the liquid natural gas carrier market is nearly sold out for the winter, so they expect traders will “utilize the ships in their existing portfolio.”
Meanwhile last month, Germany’s energy prices exceeded €1,000 per megawatt hour for the first time.
Worse still, it is now unlikely Europe will receive any gas from Russia’s Nord Stream 1 before winter begins.
On Tuesday, Swedish authorities reported two leaks in the Nord Stream gas pipelines that are likely the result of sabotage.
The leaks were found in both the Nord Stream 1 and Nord Stream 2 pipelines which run under the Baltic Sea near Sweden and Denmark. Swedish Prime Minister Magdalena Andersson said on Tuesday that the leaks are “likely a deliberate action.” Meanwhile, Norway’s Minister of Petroleum and Energy, Terje Aasland said that based on the information so far, it appears the leaks were “acts of sabotage.”
On Monday, seismologists detected underwater explosions near the pipelines, however, it is unclear if the explosions were connected to the reported leaks.