The direct impact of the increasing conflict in the Middle East is visible on the Strait of Hormuz. Earlier this waterway was an important trade route of the world, now it has become a high risk zone. In the last few days, there have been drone and missile attacks on many ships here. Some tankers have been damaged and there is also news of the death of a crew member. The Strait of Hormuz is a narrow sea route located on the southern border of Iran, which connects the Persian Gulf to the Gulf of Oman and the Arabian Sea. About 20 percent of the world’s oil supply and a large amount of LNG passes through this route.
Every day about 15 million barrels of oil is exported through the Strait of Hormuz through this route. Saudi Arabia has the highest share in this (38 percent). Apart from this, Iraq (22 percent), UAE (15 percent), Iran (11 percent), Kuwait (9 percent) and Qatar (5 percent) are also dependent on this route. Apart from this, crude oil is also exported through the Strait of Hormuz, which includes China (33 percent), India (13 percent), South Korea (12 percent), Japan (11 percent), other countries (17 percent) and other Asian countries (14 percent).
Huge decline in ship traffic
According to Lloyd’s List, usually about 107 ships pass through this route every day, but on March 1, the movement of only 19 ships was recorded. While 22 supertankers had passed a day earlier, on March 1 this number came down to only 4. Even the ships passing by are moving very slowly. This is increasing transport time and putting pressure on the supply chain. In such circumstances, freight costs and insurance premiums increase, leading to a rise in oil prices.
Impact on India and China
India imports large quantities of crude oil and gas from Gulf countries, which comes through this waterway. If there is an interruption in supply, oil prices in India may increase, the rupee may come under pressure and there will be a danger of inflation increasing. China is also dependent on the Gulf, but it has pipeline connections to Russia and Central Asia and large reserves, which may give it some relief.
America’s role
The US Navy can provide security to convoys and deploy air defense systems in this area. This can reduce the risk to some extent, but it is not easy to avoid the risk completely.
