According to a report published by the Emirati “Erm News” website, the organization confirmed that the priority at the current stage is to protect the lives of sailors and ensure the safety of commercial ships, noting that the continuing state of uncertainty is pushing shipping and insurance companies to re-evaluate transit operations.
It warned that the continuation of the situation may lead to a further rise in transportation and insurance costs, and increased pressure on global supply chains, calling for greater international coordination to ensure freedom of navigation and prevent the Strait of Hormuz from becoming a permanent high-risk area. A decline of about 94%.
The numbers show the extent of the exceptional decline in navigation traffic, as the number of large commercial ships that crossed the strait decreased last Thursday to only 7 ships, compared to 11 ships the previous day, while the average reached about 15 ships per day during the last ten days.
Before the outbreak of the crisis on February 28, transit traffic reached about 125 commercial ships per day, which means that its current levels have declined by about 94%.
This decline does not only reflect a decline in the number of ships, but also a shift in the calculations of shipping companies, which are now putting security risks and the high costs of war risk insurance at the forefront of their operational decisions.
These developments are of great importance to energy markets, as about 20% of global oil supplies pass through the Strait of Hormuz, in normal circumstances, in addition to a large share of liquefied natural gas trade, which makes the continued navigation disruption a source of pressure, especially on Asian countries dependent on Gulf energy imports.
Two weeks could change the scene
Pakistani maritime and economic analyst Muhammad Taimur told “Erm News” that the move from about 125 ships per day to 7 ships reflects “the collapse of the level of confidence in the security environment inside the strait,” noting that major shipping companies were forced to redirect part of their operations through longer and more expensive routes.
Timor warned that remaining navigation traffic at its current levels for an additional two weeks may increase pressure on crude supplies heading to a number of Asian refineries, especially with the continued restrictions on large tankers and limited land alternatives.
In this case, some consuming countries may be forced to rely more on their strategic stocks, while refiners face greater competition for available shipments and an additional rise in transportation costs.
According to Timur, the problem is not only related to the amount of oil available in the markets, but also to the ability to transport it in a timely manner, which means that disrupting one of the most important sea lanes in the world could turn a security crisis into a broader crisis in supply chains.
Difficult choices facing the major powers
In turn, Kamran Zaidi, an analyst specializing in energy affairs, believed that the land-based alternatives available for transporting oil and gas via pipelines cannot compensate for the entire quantities that were passing by sea through the Strait of Hormuz.
He pointed out that the major economic powers may find themselves facing two difficult choices: expanding maritime protection arrangements for commercial ships, which would require a greater military deployment and raise the possibility of friction, or dealing with the continued disruption of navigation and the accompanying rise in energy, shipping and insurance prices.
The crisis goes beyond oil
The potential repercussions are not limited to oil, as the Strait of Hormuz constitutes a major passage for liquefied natural gas, petroleum products, and raw materials, which means that the continued decline in ship traffic may affect multiple industrial and commercial sectors.
Also, high insurance and shipping costs may push shipping companies to continue using alternative routes, even if the security situation improves, if the risks in the strait become a permanent element in the calculations of the cost of trips.
The report warns that the continued decline in the number of ships may also lead to an accumulation of shipments in production and storage areas, coinciding with an increase in demand for supplies available from outside the Gulf region, which threatens simultaneous disturbances in prices, quantities, and delivery dates.
In light of these facts, the International Maritime Organization believes that securing the Strait of Hormuz is no longer a regional issue related to the Gulf states alone, but rather an international priority given the potential impact of any long-term disruption on global trade and the economy. (Erm News)
