Heading For Supply Shock? Four Maritime Chokepoints Flash Red As Escalating Conflict Looms

Just two days after Iranian commandos hijacked the Israeli-linked container ship MSC Aries in the Strait of Hormuz, it’s important to highlight that chaos continues to erupt at key global maritime chokepoints. 

The hijacking of the Aries container ship was lost in the noise of the widely unsuccessful Iranian missile and drone strike against Israel on Saturday evening. It will likely be forgotten as the world focuses on what appears to be an imminent Israel counterattack against Iran. 

Sal Mercogliano, a professor at Campbell University and shipping expert, wrote on X about an alarming number of maritime chokepoints under threat across the Middle East and Black Sea region. 

Mercogliano pointed out four maritime chokepoints: the Bab el-Mandeb, the Strait of Hormuz, the Suez Canal, and the Bosphorus Strait, which are each experiencing some form of direct and/or indirect disruption due to the escalating chaos in the Middle East and Eastern Europe. 

Maritime Chokepoint status:

Panama
Gibraltar
Cape of Good Hope
Baltic
Turkish Strait
Suez
Hormuz
Bab el-Mandeb
Malacca

Chokepoints Statuspic.twitter.com/j82nc2b3CT

— Sal Mercogliano (WGOW Shipping) (@mercoglianos) April 14, 2024

Let’s begin wit the latest fare up in maritime violence on Saturday morning. Iranian commandos hijacked Aries as it was heading towards the Strait of Hormuz. This incident will keep focus on the world’s busiest shipping lane and a critical chokepoint for the world’s oil supply.  

“If the Straits become an unreliable oil trading channel the outcome is binary. All previous Hormuz sabre-rattling has come to nought and I sincerely hope this is the same outcome; to the degree it becomes real and the Strait of Hormuz become blocked, crude will shoot past US$100/bbl without stopping for breath,” Liberum’s Joachim Klement wrote in a note to clients on Sunday. 

Meanwhile, Iran-backed Houthis have been targeting US, UK, and Israeli-affiliated ships for the last five to six months, disrupting global trade flows in and around Bab el-Mandeb Strait. The conflict has forced many Western vessels to sail around the Cape of Good Hope to avoid conflict in the region. Ship diversions have also led to sinking activity on the Suez Canal. 

In the Black Sea region, Turkey’s Bosporus and Dardanelles straits have seen a lull in activity as the war rages on between Russia and Ukraine. 

In the Middle East, 25% of global trade flows through the Suez Canal, Bab-El Mandeb Strait, and Strait of Hormuz, all of which are experiencing either conflict or some form of heightened risk (read the MUFG note here). 

Here’s a snapshot of the world’s chokepoints. 

An escalating conflict between Israel-Iran could quickly seize up one or more of these maritime chokepoints, spark supply chain chaos, and trigger an inflationary shock (maybe in the energy markets) across the West – something that would ruin Biden’s reelection odds or whatever is left of them and destroy Fed Powell’s ability to arrest inflation.