Global Trade Reroutes To Cape Of Good Hope While Traffic In Strait Of Hormuz Plunges 90 Pct

LONDON, March 19 (Bernama-Anadolu) -- Commercial shipping traffic through the Strait of Hormuz fell 90 per cent amid escalating conflicts in West Asia, forcing global maritime trade to reroute around the Cape of Good Hope, located at the southern tip of the Cape Peninsula, about 50 kilometres (31 miles) south of Cape Town in South Africa.

After Tehran's closure of the critical energy and oil waterway in response to joint US-Israeli attacks on Iran, the UK Maritime Trade Operations (UKMTO) Center raised the security risk in the transport corridor to critical, prompting insurers to immediately cancel war coverage policies for vessels in the region, Anadolu Ajansi reported.

Only four ships transited through the strait on March 3, marking a 90 per cent drop versus the previous seven-day average, according to real-time tracking data from Windward.

The strait historically handled an average of 138 vessels per day.

Oil tanker traffic also saw a similar 90 per cent plunge compared to pre-attack levels, data from MarineTraffic showed.

Meanwhile, Cape of Good Hope transit saw 94 vessels on March 3, up 35 per cent versus the route’s seven-day average.

Major shippers like Hapag-Lloyd, CMA CGM, and Maersk suspended all Gulf transits and rerouted around the southern tip of Africa, which adds 10 to 20 days to delivery times and inflates transport costs.

Hapag- Lloyd told Anadolu in a statement that the firm’s fleet has not transited through the Red Sea since Dec 2023, and the firm extended this decision in light of the current situation in the region and the related threats from Iranian-backed Yemeni Houthis.

French shipper CMA CGM announced it instructed all its ships in the Gulf and bound for the region to seek shelter, while passage through the Suez Canal has been suspended until further notice.

Maersk suspended voyages for vessels passing through the Suez Canal via the Bab el-Mandeb Strait, while rerouting all voyages from the Middle East–India ⁠to the Mediterranean and from the Middle East–India to the east coast of the US around the Cape of Good Hope.⁠

The Strait of Hormuz is a strategically vital waterway positioned at the mouth of the Persian Gulf. The transport corridor connects West Asian oil and liquefied natural gas (LNG) production to global markets via the Arabian Sea and the Indian Ocean.

The waterway handles the transit of around 20 million barrels of oil and petroleum products per day while accounting for roughly one-third of all crude oil transported by sea.

⁠China alone consumes 5.3 million barrels of crude oil transited through there, while India consumes 2 million barrels, Japan and South Korea 1.7 million barrels each, and other countries receive a combined 4.2 million barrels via the Strait of Hormuz, according to S&P Global data.

At the same time, Saudi Arabia is the largest exporter using the strait with 5.1 million barrels of crude oil shipped per day, followed by Iraq with 3.3 million barrels, the United Arab Emirates with 2.6 million, Iran with 1.7 million, Kuwait with 1 million, and other regional producers totaling 1 million barrels.

Meanwhile, the UAE and Saudi Arabia are the top exporters of 5 million barrels of refined petroleum products transiting the waterway daily, making up for 1.26 million and 1.04 million barrels per day, respectively.

Oil tankers began to divert to the Port of Yanbu on Saudi Arabia’s western coast, while loadings at the port surged to 2.44 million barrels per day so far in March, way above its six-month daily average of 650,000–940,000 barrels, according to Anadolu.

The Iraqi Oil Ministry halted production at the Rumania complex in Basra on Tuesday due to severe tanker constraints preventing vessels from entering the Gulf basin, pushing crude oil levels at domestic storage facilities to critical maximums.

Iraq’s Basra Port, which normally boasts a daily capacity of 3.5 million barrels, handled zero crude oil on Monday.

JPMorgan analysts say that major regional oil producers will be forced to shut down facilities if the disruption in the Strait of Hormuz persists for 21 days.

Tehran actively targeted regional oil and natural gas production plants by drone-striking Saudi Aramco facilities in the eastern Saudi city of Ras Tanura in retaliation for the US–Israeli joint operation.

State-owned QatarEnergy reportedly halted production at its massive LNG facility in Ras Laffan after drone strikes on Monday, deepening global fears of a severe market tightening.

Ross Wyeno, head of LNG short-term analysis at S&P Global, told Anadolu that supply is insufficient to compensate for the massive imbalance caused by production halts in Qatar and the UAE.

Wyeno stated that the US boasts the largest flexible LNG source in the world, so the freely loaded American LNG will go to Asia, where prices are the highest.

He said shipments from the US will become more and more scarce if the situation does not improve, potentially impeding Europe's efforts to fill its storage facilities and tighten the gas balance.

A recent development reflects this, as an LNG tanker originally bound for Europe reportedly changed course on Wednesday due to the price hike and is now headed for Asia on Thursday.

-- BERNAMA-ANADOLU