Due to the war in Iran, the Strait of Hormuz is effectively closed, and shipping through the strategic sea route has almost completely stopped. The strait is one of the most important routes for the world's export of oil and liquefied natural gas, writes the German economic publication En Te Fau in its analysis, quoted by BTA.
The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. At its narrowest point, it is about 33 kilometers wide, and the shipping lanes in each direction are approximately three kilometers. It is used to export oil from key producers such as Saudi Arabia, Iraq, Kuwait, Qatar, Bahrain and the United Arab Emirates.
The Iranian Revolutionary Guard Corps announced a blockade of the strait after the start of US-Israeli attacks on the country. According to media reports, military officials have warned that any ship that tries to pass through could be attacked. Hundreds of cargo ships, including oil and gas tankers, are anchored in the area.
Almost a fifth of the world's oil consumption passes through the Strait of Hormuz. According to data from the analytical company “Vortexa“ (Vortexa), an average of more than 20 million barrels of crude oil were transported through it per day last year. About 20 percent of the world's trade in liquefied natural gas also passes through this route, with Qatar exporting almost all of its liquefied gas this way.
Alternative routes are limited. There are pipelines through Saudi Arabia to the Red Sea and from the United Arab Emirates to the Gulf of Oman, but according to the International Energy Agency, they can only handle about a quarter of the usual volume that leaves the region by sea. Iran has no alternative route outside the strait.
The International Energy Agency has warned that any prolonged disruption to flows through the Strait of Hormuz would have serious consequences for global oil markets. Since the conflict began, oil prices have already risen by about 11 percent.
Analysts have warned that a prolonged closure of the Strait of Hormuz would affect Asian economies to varying degrees depending on their dependence on energy imports and supplies from the Persian Gulf, CNBC also writes.
In a note, investment bank „Nomura“ (Nomura) points out that Thailand, India, South Korea and the Philippines are among the most vulnerable due to their high dependence on oil imports, while Malaysia could be relatively less affected as a net energy exporter.
South Asia
According to data from “Kpler“ (Kpler), Qatar and the United Arab Emirates provide 99 percent of Pakistan's liquefied natural gas (LNG) imports, 72 percent in Bangladesh and 53 percent in India.
Analysts point out that Pakistan and Bangladesh have limited storage and supply diversification capabilities, making them particularly vulnerable to disruptions. Bangladesh already has a structural gas deficit of more than 1.3 billion cubic feet per day, according to the Institute for Energy Economics and Financial Analysis.
India is at significant risk because more than half of its LNG imports come from the Persian Gulf, and many contracts are indexed to the price of Brent. UBP estimates that about 60 percent of India’s oil imports also come from the Middle East, meaning a prolonged blockade would push up energy costs and put pressure on the current account.
China
China is the world’s largest importer of crude oil and buys more than 80 percent of Iranian oil, according to Kpler. About 40 percent of oil imports and 30 percent of LNG imports pass through the Strait of Hormuz.
Analysts note that the country has larger buffers. At the end of February, LNG stocks amounted to about 7.6 million tons, which provides short-term coverage. In a longer interruption, China could shift demand to Atlantic supplies, which would intensify price competition in Asia.
Japan and South Korea
According to UBP, the Middle East supplies about 75 percent of Japan's oil imports and 70 percent of South Korea's. Their exposure to LNG from the Persian Gulf is lower - about 14 percent for South Korea and 6 percent for Japan.
Stocks are limited - approximately 3.5 million tons of LNG for South Korea and 4.4 million tons for Japan, covering between two and four weeks of consumption. According to “Nomura“ South Korea's net oil imports are about 2.7 percent of GDP, increasing the vulnerability of the current account to a price shock.
Southeast Asia
In Southeast Asia, the main impact is expected to be higher inflation rather than an immediate shortage. Countries that rely on the spot market for LNG will face higher costs if competition with Europe for supplies intensifies.
Thailand is among the hardest hit, with net oil imports amounting to 4.7 percent of GDP. Nomura estimates that every 10 percent increase in oil prices worsens the country's current account by about 0.5 percentage points of GDP.