Hormuz and Red Sea pressure mounts
- Fighting around the Strait of Hormuz and Red Sea disruptions pushed Brent crude back above $100, tightening shipping assumptions. (cnn.com) - Reports warn undersea cable damage could cause major internet outages across the Gulf, risking visibility and communications. (indiatoday.in) - The combined sea-route and digital risks are already lifting freight costs and forcing retailers and 3PLs to add buffer inventory. (policycircle.org)
Oil is back above $100 a barrel as fighting around the Strait of Hormuz collides with a Red Sea shipping crisis that never fully cleared. (cnn.com) CNN reported on April 18 that the war that followed U.S. and Israeli strikes on Iran on February 28 unleashed a major oil supply shock, and U.S. gasoline prices rose by more than $1 a gallon in six weeks to above $4.10. (cnn.com) The Strait of Hormuz is the narrow exit for Gulf oil and gas. The U.S. Energy Information Administration said 20 million barrels a day moved through it in 2024, equal to about 20% of global petroleum liquids consumption. (eia.gov) The Red Sea is the other pressure point on the same trade map. The World Bank said vessel traffic through the Suez Canal and Bab el-Mandeb had fallen by three-fourths by the end of 2024, forcing many ships around the Cape of Good Hope. (worldbank.org) That detour adds days, fuel and insurance. UN Trade and Development said rerouting around southern Africa had surged 89% by mid-October 2024, while Suez transits were down 57% from their previous peak. (unctad.org) Now the risk is no longer only ships and cargoes. India Today reported on April 23 that an Iran-linked Tasnim report warned damage to undersea cables in the Strait of Hormuz could cause major internet outages across the Gulf. (indiatoday.in) Those cables are the seabed version of a data highway, carrying cloud traffic, payments, logistics messages and routine business communications between Gulf states and the wider internet. The World Bank said the Red Sea crisis had already shown how distressed ships can damage fiber-optic lines and disrupt telecommunications. (worldbank.org) Importers and logistics companies are reacting before any full shutdown. Policy Circle reported on April 22 that freight rates are rising, insurance costs are hardening and companies are adding inventory buffers as they plan for repeat disruptions rather than a one-off shock. (policycircle.org) There is a legal argument against treating these waterways as bargaining chips. Policy Circle noted that the United Nations Convention on the Law of the Sea protects transit passage through straits used for international navigation, even when they run beside a coastal state’s territory. (policycircle.org) For now, the market signal is simple: one chokepoint moves oil, another moves containers, and both now carry a digital outage risk as well. (eia.gov) (worldbank.org)
