The Daily View: Unintended consequences
THE sorry saga of FSO Safer, a near 50-year-old decaying husk of a tanker that has become a floating metaphor for Yemen’s intractable political problems, is far from over.
The latest chapter should be read as a cautionary tale about the evolution of risk in maritime trade.
The detail behind the decision to buy a secondhand tanker out of international donations to house 1.1m barrels of oil, the ownership of which was a hotly contested, decades-long political maelstrom, are best read in depth and in the context of Yemen’s turbulent history.
The abridged version goes something like this: FSO Safer, one of the largest tankers ever built, was once used to help store the country’s oil production. But somewhere between the many wars that shaped modern day Yemen, FSO Safer became a floating bomb used for political leverage.
Suffice to say, the calculus of risk back in 2023 deemed it necessary to spend $55m of UN-raised cash to avert an oil spill that would have cost over $20bn to clean up.
In the long list of scenarios that could have gone wrong with such a maverick and unprecedented plan, the emergence of the Houthis as the pivotal force in global trade was not high up anyone’s risk list. Nor was the prospect of the ‘donated’ tanker and its rusting predecessor becoming a Houthi-controlled trading platform for Russian gasoil.
The fact that the UN Development Programme today finds itself in the awkward position of paying a monthly fee of $450,000 to maintain a ship now controlled by Iranian proxies and being used to store Russian gasoil, is a problem. But the bigger problem is that this has gifted the Houthis yet more political leverage, even as Israeli and US air strikes seek to diminish their power.
While the urgency of removing the oil from FSO Safer was never in doubt, the unintended consequence of the plan to address that problem has played out much to the benefit of the Houthis, who have essentially been gifted a storage facility bought with, and maintained with, donor money and UNDP funds.
After a seven-month hiatus, the Houthis this weekend have announced their return to a campaign against shipping that continues to divert global trade and has re-written the rules of risk in shipping.
The attack on Magic Seas effectively resets the clock on any remaining hopes that the Red Sea will re-open to the majority of trade.
Regardless of the frequency or accuracy of their targeted hits, ships had not returned. Volumes remained stubbornly within the “new normal” range and 60% lower than pre-Houthi attack levels before this latest hit.
That situation will remain unchanged as long as the Houthis present a credible threat to ships and right now, there is scant evidence that the Houthis’ power to hold the world to ransom is in any way diminished.
Richard Meade
Editor-in-chief, Lloyd’s List
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