Suez Canal blockade: What does it mean for oil prices?

After one of the biggest container ships in the Suez Canal ran aground early Tuesday, oil prices climbed as much as 4 per cent on the back of fears of a supply shortage. However, trends on Wednesday morning suggest that the market may be over the blockade concerns.

The container ship is now stuck at a right-angle to the passage. This logjam has sent the shipping industry into a wreck, frenzied oil prices and affected trade.

The route is of major importance in the shipping of crude and refined products. Numerous cargo ships are now stuck and cannot go through the canal, which has forced them to take alternate routes. This seems to be the major reason for the climb in prices on Tuesday.