By Martina Kao    Photo：CANVA

In today's era of globalization, the shipping industry plays an extremely important role, especially when it comes to the transportation of oil and energy. However, if the Strait of Hormuz is paralyzed, it will have a serious impact on global shipping. The Strait of Hormuz is located at the outlet of the Persian Gulf and is one of the important waterways connecting the Persian Gulf and the Indian Ocean. If Iran controls this strategic location, it will mean that it controls the lifeblood of global oil transportation.

First, the blockade of the Strait of Hormuz will seriously affect global energy supplies. 20% of the world's oil and 30% of natural gas are transported through this strait. If Iran implements a blockade, the global energy supply chain will be severely disrupted, leading to a sharp rise in oil prices and a heavy blow to the global economy. The surge in oil prices will further push up the costs of various industries, intensify inflationary pressure, and may trigger a global economic recession.

Second, the blockade of the Strait of Hormuz will cause global shipping costs to skyrocket. The shipping industry is an important pillar of global trade, and the Strait of Hormuz is one of the important channels connecting the East and the West. If shipping is unable to pass through the strait, it will force shipping companies to find alternative routes, which will lead to an even greater increase in shipping costs that are already tight in 2024. Due to the adjustment and extension of routes, cargo transportation time will be extended and the supply chain will be severely damaged, causing a huge impact on global trade.

In addition, the blockade of the Strait of Hormuz will also trigger geopolitical tensions. As an important node in regional conflicts, once the Strait of Hormuz is blocked, it will attract the attention and intervention of the international community. Neighboring countries and international organizations may take various measures to alleviate the crisis, including diplomatic mediation and military intervention. This will further tense the regional situation and may trigger larger-scale conflicts, posing a serious threat to global peace and stability.

Based on the above points of view, the blockade of the Strait of Hormuz will have a serious impact on global shipping, including a blow to global energy supply and shipping costs, as well as possible geopolitical tensions. However, the United States is currently in the stage of imposing sanctions on Iranian oil. The main customer of Iran's oil exports is China. Oil industry players believe that short-term oil prices may fluctuate slightly, but long-term oil prices still need to observe the impact of the political situation. In addition, Iran does not want to see the inability to export oil, because this will have a significant economic impact on Iran's own trade. Therefore, although the situation in the Strait of Hormuz deserves attention, the possible impact on the global oil market in the short term is unclear, and subsequent developments need to be paid close attention to.

Appreciate if you could share TGL Blog among your friends who are interested in first-hand market information of supply chain and updated economic incidents.