United States President Donald Trump’s planned naval blockade of Iran would further cripple international shipping, exacerbating the energy crisis roiling the global economy, analysts warn. Oil prices surged above $100 a barrel on Monday after Trump announced that the US Navy would blockade the Strait of Hormuz and “interdict every vessel in international waters that has paid a toll to Iran”. Central Command, the US military’s command responsible for operations in the Middle East, said in a statement the blockade would affect only ships entering and exiting Iranian ports, an apparent scaling-back of Trump’s threat to fully block the strait.
Trita Parsi, cofounder of the US-based Quincy Institute for Responsible Statecraft, said a US blockade would have a cascading impact across the global economy. Oil could rise above $150 a barrel if the blockade were to trigger retaliation from the Iran-aligned Houthis in Yemen, who could shut down Bab al-Mandeb, a strait that connects the Red Sea to the Gulf of Aden and Indian Ocean, Parsi said. The strait is an alternative export route for Gulf oil and gas.
A blockade aimed at depriving Iran of revenues would mark a sudden reversal in policy by Washington. The Trump administration last month announced it would waive some sanctions on Iranian oil exports as a way to help ease the global energy crunch. Iran has essentially closed the strait since the start of the US-Israeli war on February 28, allowing only a small number of ships to transit after vetting and authorisation.
About 3,200 vessels were stranded west of the strait due to the blockage as of Saturday, according to the maritime intelligence company Windward. Anas Alhajji, former chief economist at NGP Energy Capital Management, said expected non-Iranian ships would likely keep avoiding the strait despite the US military’s assurances that they will not be impeded because of elevated insurance premiums. Ships may also fear retaliation from Iran, Alhajji said.
The resulting rise in oil and gas prices would also cause the cost of chemicals, fertilisers and raw materials used to make plastics to increase, according to analysts. Cameron Johnson, a senior partner at the Shanghai-based supply chain consultancy Tidalwave Solutions, said he expects prices of many raw materials to rise within several weeks if Trump makes good on his blockade threat. But if this prolongs itself into the end of the month and into the first week of May, you will see prices all over the world spike for raw materials.” Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore, said the situation for global supply chains could get “much worse” under the blockade.
As an example, fabrics will get more expensive,” Elms told Al Jazeera. Many can’t get blister packs for pills or lids for consumer goods. We can expect consequences for food production later this year and into next year with fertiliser disruptions and lack of supply,” Elms said.
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