The escalation of the conflict in the Middle East is beginning to be felt strongly in the world economy. The price of oil and tensions in energy transportation threaten to generate a new global shock.
One of the elements that most worries analysts is the blockade of the Strait of Hormuza strategic maritime route through which a fundamental part of the planet’s energy trade normally circulates. For the economist and energy expert Tatiana Mitrovaa researcher at the Center for Global Energy Policy at Columbia University, this is a scenario that for decades was considered the worst possible.
“The closure of the Strait of Hormuz has been the apocalyptic scenario of the energy market since the seventies,” warns the specialist.
The global oil bottleneck
The Strait of Hormuz connects the Persian Gulf with the Indian Ocean and it is one of the most important energy corridors on the planet. Approximately one fifth of the oil transported by sea and about a quarter of liquefied natural gas (LNG) that is traded internationally usually go through that step.
The interruption of maritime traffic has drastically reduced activity in the area. Where normally more than a hundred ships transit each day, now only a few do so, according to sources in the maritime transport sector.
The consequences are being immediately reflected in the energy markets:
- Brent oil has reached close to $120 per barrel
- tanker charter rates have skyrocketed
- maritime transport in the region has been drastically reduced
In some cases, the cost of renting a tanker has multiplied up to between 400,000 and 700,000 dollars a dayalthough many of these operations barely materialize due to the lack of safe routes.
Limited alternatives for energy transportation
Some of the crude oil produced in the Gulf is still can be exported through pipelines that connect Saudi Arabia with ports on the Red Sea or the Mediterranean. However, this capacity is insufficient to replace normal maritime traffic.
The problem is even greater in the gas market. Unlike oil, Liquefied natural gas depends almost entirely on transport by ships specialized and there are very few logistical alternatives if a route is interrupted. This especially affects gas from Qatar, one of the world’s largest exporters.
Analysts point out that the gas market It is much less flexible than the tanker. Countries like the United States or Australialarge LNG producers, have hardly any spare capacity to quickly compensate for a supply interruption.
As a result, gas prices in international markets have begun to rise sharply, especially in Europe and Asia.
The impact is already noticeable in Europe
In Europe, the wholesale price of gas has doubled since the start of the crisis, although part of that increase reflects expectations about the future rather than immediate shortages. In countries like Germany, the rise in energy prices is already being passed on to consumers. The price of heating oil, for example, has experienced sharp increases in just a few days.
However, Germany imports relatively little oil directly from the Gulf region compared to other areas of the world, although the European Union as a whole remains depending in part on those supplies.
Furthermore, current energy demand is relatively moderate due to the mild climate and industrial activity that is still contained in some sectors.
A crisis that goes beyond energy
The consequences of the crisis are not limited to oil or gas. The blockade of trade routes in the Middle East is beginning to affect other key sectors of the world economy. Among the impacts that are already observed, the following stand out:
- rising prices of fertilizers such as urea, largely produced in the Gulf
- disruptions in shipping between Asia and Europe
- drop in air freight traffic in large logistics centers in the Middle East
Los airports in Dubai, Doha or Bahrain usually function as large distribution centers for international air transport. The reduction in operations at these facilities is affecting both cargo flights and passenger planes that transport goods in the hold.
At the same time, Alternative shipping routes are also lengthening. Many ships are avoiding the Red Sea due to attacks in the area and opting to go around Africa, which can add up to two extra weeks to transporting goods between Asia and Europe.
All of this is generating a domino effect in international trade. And although It is still too early to know how long the crisis will last, Many markets are already preparing for a prolonged period of energy and logistics uncertainty.
