On a typical day, approximately 3 million barrels of oil passes through the key trade route that accounts for 12 per cent of global trade.
But in the long run, concern over rising cases of COVID-19 in Europe, Asia and the US will serve to suppress demand for oil and put downwards pressure on its price.
“So far all that’s happened is that the Suez problem caused the world oil price to recover from its fall a few days ago, and overnight it's already starting to fall again, leaving it about where it was a week ago and below where it was earlier this month,” AMP Capital chief economist Shane Oliver told Yahoo Finance.
“So as things currently stand, it's hard to see much flow through to petrol prices.”
The destination of most oil tankers passing through the Suez Canal is Europe – but demand for oil in the continent is weak at the moment as several countries across Europe grapple with a third wave of COVID-19.
“If Europe was in a better state in its COVID-19 battle, then the disruption would possibly create a more prolonged issue but this is not the case. That is why traders today quickly corrected some of the previous day’s gains,” said Rystad Energy analyst Bjornar Tonhaugen.
NRMA spokesperson Peter Khoury noted that the Suez Canal blockage would be temporary.
“The factors causing the prices to fall are offsetting any concerns around the Suez Canal – that’s the delay in the rollout of the vaccine globally, fears that some parts of the world, like India, are going into lockdown, and the impact [this will have on] slowing down economic growth,” he told Yahoo Finance.
“But [regarding] this incident, the expectations are that it will be a short term concern.”
Oliver and Khoury both indicated that petrol prices could even tick lower for Aussies.
“If the blockage takes weeks to clear, it may have a bigger impact on the world oil price – but the impact on the oil price in our region may be minimal, as oil coming from the Middle East to Asia does not flow through the Suez Canal. In fact it could even lead to lower oil prices in our region if oil can’t flow through to Europe via the Canal… which could mean lower petrol prices,” Oliver said.
“Prices will be lower heading into Easter than we thought they would be,” Khoury added. “But things are volatile, as we have seen.”