Strait of Hormuz Shutdown: Global Oil Crisis

0:00On March 3rd, China's government is urging all sides in the escalating Iran conflict to protect ships passing through the strait of Hormuz, where maritime traffic has ground to a hall after recent missile strikes by the U.S. and Israel, followed by Iran's retaliation. The strait, a vital choke point linking the Persian Gulf to the Gulf of Oman, handles about 20% of the world's seaborn crude oil and a big chunk of liquefied natural gas. Traffic plunged to just seven vessels on March 2nd, down sharply from the usual 79 a day, marking four days of near closure. This shutdown hits major oil exporters like Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, and Iran hard, sparking energy shortages and spiking, prices worldwide. Countries such as China, the top oil importer and big buyer of Iranian crude, along with India, South Korea, Thailand, and the Philippines, faced the biggest strains from disrupted supplies. Attacks on tankers, including one set of blaze by Iranian drones, have led insurers to cancel war-risk coverage and expand high-risk zones across the Gulf.

1:09Freight rates for very large crude carriers to China have jumped to over $424,000 a day, four times recent levels. Shipping firms are now rerouting container ships around Africa's Cape of Good Hope, and suspending poor calls in the region to keep crews and cargo. Safe, as low-traveled volumes pile on daily pressure amid the standoff. Safe, as low-traveled volumes pile on daily pressure amid the standoff.