The narrow
sea passage sits between Oman and Iran, and experts have said a prolonged conflict in the Middle East could lead to a sustained rise in oil prices, fueling inflation, and have global economic effects.
Geopolitical analyst Dr Geoffrey Miller told The Front Page that any disruption there would have global effects.
“A huge amount of the world’s oil comes through that narrow corridor. Those Gulf countries, Iraq, Kuwait, Saudi Arabia, and the UAE, account for roughly half the world’s oil production.
“If you choke off the Strait of Hormuz, you’re choking off a huge proportion of the world’s oil. And of course, that is used not just for vehicles all around the world, but for all manner of production.
“When the Strait of Hormuz sneezes, the world really catches a cold. And that’s what we’re really seeing at the moment with oil prices,” he said.
Ships crossing the Strait of Hormuz carry around 20 million barrels per day. Qatar, among the world’s biggest liquefied natural gas exporters, sends almost all of its LNG through the strait.
Oil and gas are traded globally. Any disruption there will reverberate through global markets and supply chains.
So even countries, like New Zealand, whose energy needs are not met by imports from the Persian Gulf, will be affected by price increases.
“Down here in New Zealand, we might be a long way from the Gulf, thousands of kilometres away, but New Zealand is very much affected by everything that’s going on.
“In the past, New Zealand did import the raw crude oil, and that mostly came out of the Middle East. That’s where most of the production is that was coming to the Asia Pacific.
“Now, New Zealand instead imports its diesel and petrol refined from the likes of Singapore, Japan, and Indonesia. These are not massive oil-producing countries. Singapore is simply refining the crude that still comes from the Middle East, which still comes from the Strait of Hormuz,” he said.
Listen to the full episode to hear more about:
- OPEC and oil prices
- LNG, gas, and energy sources
- Potential risks for New Zealand
- Past crises of Middle Eastern shipping routes.
The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5pm. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting who joined NZME in 2016.
You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify or wherever you get your podcasts.
