The Strait of Hormuz crisis explained: What it means for global shipping

The escalating war in the Middle East has ratcheted up fears of prolonged disruption to global trade via key maritime corridors like the Strait of Hormuz and the Bab el-Mandeb Strait. Container shipping giants have suspended operations through the strategically vital Strait of Hormuz and rerouted vessels around the southern tip of Africa, following U.S. and Israel strikes on Iran over the weekend. Danish shipping company Maersk said in a statement that it would suspend all vessel crossings in the Strait of Hormuz until further notice, warning that services calling ports in the Arabian Gulf may experience delays. Located in the gulf between Oman and Iran, the Strait of Hormuz is recognized as one of the world's most important oil choke points. In 2023, oil flows through the waterway averaged 20.9 million barrels per day, according to the U.S. Energy Information Administration, accounting for about 20% of global petroleum liquids consumption. Getty Images Maersk, widely regarded as a barometer of global trade, said the situation in the Middle East had also prompted it to pause future trans-Suez sailings through the Bab el-Mandeb Strait until further notice. This waterway is a narrow maritime pinch point that sits between the Horn of Africa and the Middle East, linking the Red Sea to the Gulf of Aden and the Indian Ocean. The Bab el-Mandeb Strait was estimated to account for 12% of seaborne oil trade and 8% of liquefied natural gas trade in the first half of 2023. Maersk said all sailings on the Middle East-India to Mediterranean and Middle East-India to east coast U.S. services would be rerouted around the Cape of Good Hope. Peter Sand, chief analyst at Xeneta, said higher container shipping rates should be factored in for the Middle East region at least for as long as the conflict persists, adding there is "no real alternative" to ocean freight. "The risk of geopolitics has shown its ugly face with higher frequency and more severity over the past years than ever befo...