Strait of Hormuz Closure Disrupts Global Fuel Supply, Asia Hit Hardest

Hong Kong. Due to the ongoing conflict in West Asia, the major fuel transport route, the Strait of Hormuz, is virtually shut down. The disruption of this passage, through which nearly 20% of the world's fuel is transported, is having a global impact.

Fuel prices have increased, and supply has become limited. Countries' oil reserves are dwindling. This impact is becoming acutely visible in Asia, according to a report published last week by the American multinational investment bank JPMorgan.

Normally, oil tankers from the Persian Gulf reach Asia in 10–20 days. It takes ships 20–35 days to reach Europe and Africa from here. They only reach the United States in 35–45 days. The report mentions that Asia is caught in this supply disruption, and it is gradually moving westward. The last oil tanker departed the Strait of Hormuz on February 28. Most of this supply has already been consumed.

The biggest shock from the supply disruption will particularly hit Southeast Asia. This impact has already caused both price hikes and oil shortages in the region. Oil supply from West Asia to Southeast Asia has decreased by 41% this month compared to the previous month. The subsequent impact will be felt in Africa.

The impact is expected to intensify in early April. The report states that the impact may vary depending on local storage levels and import dependency. JPMorgan notes that Kenya is experiencing fuel shortages at the retail level, while Tanzania has sufficient reserves.

In Europe, the effects are likely to start being felt by mid-April. However, they have large reserves and benefit from alternative supplies from the Atlantic region.

The United States will be the last to feel the impact. Due to sufficient domestic production, the direct effect of oil shortages may be less visible here in the short term. However, the report points out that California is sensitive to supply challenges. The report also indicates a possibility of high prices remaining in the United States.