Conflict Brewing In The Middle East

August 2nd, 2024: What could be the impact on the tanker market? Ever since October 2023, when the Hamas attack on Israel ignited a major conflict in that region, tensions in the Middle East have been high. The recent killings of senior Hamas and Hezbollah officials have further escalated the situation. In the past, increasing tensions in the Middle East would immediately translate into a spike in oil prices, usually followed by higher tanker rates. The reaction of the oil and tanker markets has been fairly muted so far. Is that a quiet before the storm or have the circumstances in the region changed? While nobody knows what will happen next in the Middle East, we can discuss some of the elements that are different this time, while keeping in mind that certain conditions that could lead to an escalation are still very much in place. There are several reasons why conflicts in the Middle East always trigger thoughts of spikes in oil prices and tanker rates. Firstly, the region still produces and exports a very significant percentage of global oil. In 2023, around 30% of global crude oil production came from the Middle East. The vast majority of this oil originates from five OPEC countries: Saudi Arabia, Iran, Iraq, Kuwait and the United Arab Emirates. The other reason why the world – and the shipping industry in particular – pays close attention to the Middle East, is that three of the major world oil transit “chokepoints” are in the region. In 2023, 20.9 Mb/d of crude oil and products passed through the Strait of Hormuz, 8.8 Mb/d through the Suez Canal / Sumed pipeline and 8.6 Mb/d through the Bab el-Mandeb Strait. Please fill in below form to continue read.