San Francisco Frontiers - Strait of Hormuz impasse squeezes world shipping

- What is the strait's importance to world markets? -

The strait is especially key to the world energy markets, with around 20 percent of global seaborne oil passing through.

That said, analysts believe that cutting off access, as Iran has threatened to do, will not affect the major Asia-Europe shipping route, with the Gulf ending in a cul-de-sac by the shores of Kuwait, Iraq and Iran.

But the strait is essential to all regional trade as it allows access to Dubai's Jebel Ali port, the world's 10th-largest container port and a redistribution hub for more than a dozen countries in the region.

In Jebel Ali, container ships are unloaded onto smaller vessels bound for countries ranging from east Africa to India, noted Anne-Sophie Fribourg, vice-president of France's TLF freighters union.

- Has it ever been closed? -

The Strait of Hormuz has always been open for business.

Even during the Iran-Iraq war between 1980 and 1988, commercial passage was maintained despite attacks on oil tankers, said Paul Tourret, director of the French High Institute for Maritime Economy.

The current "freeze" on goods transiting through the strait is "unprecedented", said Cyrille Poirier-Coutansais, research director at the French Navy's Strategic Studies Centre.

Since Israel and the United States launched strikes on Iran on Saturday, the world's largest shipping firms -- Italian-Swiss MSC, Denmark's Maersk, France's CMA CGM, Germany's Hapaq Lloyd and China's Cosco -- have ordered their ships to find shelter and stay safe.

On the Marine Traffic map, which tracks world shipping movements, you can make out clusters of ships, mainly tankers, anchored far to the north near Kuwait, as well as off the coast near Dubai.

The Iranian merchant navy is likewise visible off the Iranian port of Bandar Abbas on the other side of the strait.

Several other distinct groups of ships can be seen just before the entry to Hormuz, Tourret said.

- What goods transit through Hormuz? -

Germany ships cars, machinery and industrial products via the strait, while France mainly sells cereals and agricultural products, cosmetics, luxury goods and pharmaceuticals.

Italy, meanwhile, exports food, large quantities of marble and ceramics, said TLF's Fribourg.

In the other direction, besides oil and gas, from which fertilisers and plastics are derived, the Middle East accounts for nine percent of the world's primary aluminium production, nearly all of which is exported, according to TD Commodities.

- Will there be delays? Price increases? -

Several online shopping platforms have warned their clients that delivery times may increase.

Temu and Shein have warned of delays of several days, while Amazon forecast even longer waits, according to Bloomberg.

Freight costs are already rising as a result of the additional charges shipping companies are imposing for transit in the region.

For the Europe-Asia route, ships are also no longer using the passage through the Red Sea and the Suez Canal due to fears of renewed attacks by Iran's allies in Yemen, the Houthis.

Rounding the Cape of Good Hope, at the tip of South Africa, adds around 10 extra days at sea and increases costs by roughly 30 percent.

G.Collins--SFF