The escalation in the Middle East is reaching the vital artery of the world economy: Iran has officially declared the Strait of Hormuz closed.
Every ship passing through the strait is declared a target. Since over 30% of global seaborne crude oil trade and 20% of global liquefied natural gas (LNG) flow through this bottleneck, Asia in particular faces an unprecedented supply and price shock.
The shock in numbers
Traffic: 80% decline, ~150 ships stranded
Oil price: From $73 to ~$80/barrel (+10%)
Casualties: 5 tankers damaged, 2 dead
Normal state: 13 million barrels/day
Country | Risk factor | Economic impact |
|---|---|---|
Thailand | 🚫 Extreme | Highest net oil imports in Asia (4.7% of GDP). |
South Korea | 🚫 High | 70% of oil comes from the Middle East. |
Japan | 🚫 High | Possible GDP drop of 0.65 percentage points. |
China | ⚠️ Medium | Largest importer, but has strategic buffers (LNG reserves). |
India | 🚫 High | Dual shock from physical shortage and financial pressure. |
Methanol shock: China's factories under pressure
Besides oil and gas, an often underestimated raw material is hitting Chinese industry: methanol.
Industrial base: Methanol is the basic material for paints, plastics, and textiles. Since Iran is the world's second-largest producer, China's manufacturing sector faces a massive raw material shortage.
Price jump: Spot prices in China have already risen by over 7%. Initial chemical plants are throttling production as inventories in ports shrink rapidly.
Trump's response
The US government has announced it will militarily escort civilian tankers and offer state insurance for ships in the Gulf.
While US consumers suffer from gasoline prices, US oil producers could financially profit from global scarcity.
Sources: Al Jazeera, CNBC, SCMP
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