One by one: the major shipping companies stop the activity in the Straits of Hormuz

The shipping giant MSC announced today (Sunday) afternoon that “as a preventive measure, MSC has stopped all shipments to the Middle East region until further notice.”

According to Linearatica, a business intelligence company for the shipping industry, there are 170 ships that are stuck in the Persian Gulf and are currently not leaving it. Together they reach 450 thousand container equivalents, which is 1.4% of the capacity of container ships in the whole world. Several other companies from Japan also announced the same, and ships carrying the Greek flag were removed from the straits by government order.

The Straits of Hormuz is a narrow body of water between Iran and the Arabian Peninsula, connecting the Persian Gulf to the Indian Ocean and from there to the entire world. Because of this, 20% of the oil and gas traffic goes through a water basin that is easy to disturb, similar to the Bab al-Mandab between Yemen and Africa, which leads to the Suez Canal. These, it should be noted, have now returned to being a dangerous place due to the Houthis’ threats to disrupt maritime traffic there as well.

Impact on oil prices

The Straits of Hormuz is of great importance to international oil prices, and for many countries it is their only outlet to the ocean system. A number of ports in the Gulf, such as in Bahrain, Qatar and Kuwait, temporarily stopped their activities. In the United Arab Emirates, we continue to operate as usual.

Several times in history, Iran has threatened to close the straits, but has never actually done so. The closest thing to this was the mutual attacks between Iran and Iraq on each other’s tankers, but the straits were never fully blocked.

But now it seems that the world shipping system is moving away from the Straits of Hormuz. Reuters is already reporting on three oil tankers damaged in the Gulf, and the insurance prices for ships crossing the straits have jumped by 50%, which in itself makes the passage more difficult and will raise transportation prices and hence the prices of any goods they load. That is, of course, if enough ships pass through the straits in the first place.

In one of the cases, one of the ships attacked was actually under American sanctions, probably part of Iran’s shadow fleet. According to reports, the attack was carried out from the shores of Iran.