«If the situation does not return to normal by May, the world economy will be hit by a historic crisis». In recent days, some internet users have begun listing the possible impacts of the blockage of the Strait of Hormuz outside of Europe, mainly in Asian and Oceanic countries.
Thus, South Korea could enter a «war economy» and without the strait reopening in the coming months, Australians would be currently forced to «ration» in order to «save agricultural crops». Countries like Sri Lanka, the Philippines, Thailand, and India have already started applying «emergency measures» such as a maximum quota for purchasing fuel and intermittent cuts to air conditioning to reduce energy consumption.
«Energy crisis», «global recession» – does the blockage of this strait really have the power to paralyze the economy of so many countries?
FAKE OFF
Plastic in trouble in South Korea
In South Korea, there is currently no talk of a «war economy», but real problems regarding the production of certain products are starting to emerge. This is particularly the case with garbage bags, and more broadly with the entire plastic chain. The Korean Federation of Plastic Industries issued an alert on March 25, stating that the chemical industry responsible for producing and delivering the synthetic resins needed for plastic bag production had to scale back.
This is not entirely surprising since South Korea relies entirely on imported oil, with over 60% transiting through the Strait of Hormuz to reach its destination. On March 24, the South Korean president called on the population to implement a series of measures in their daily lives – taking shorter showers, using the vacuum cleaner only on weekends, and avoiding leaving the phone charging all night – to save energy in case the strait remains blocked.
Shortage of fruits and vegetables in Australia
Australia is indeed organizing itself to deal with supply difficulties, and even shortages, of fuels and fertilizers, as reported by many Australian media outlets. It’s a matter of timing. The strait blockage comes at a time when many farmers in the country need to harvest the fruits of their labor. This should be followed by sowing new crops and fertilizing the land.
However, without fertilizers, meeting deadlines is impossible. This is even though Australia has the largest certified organic agricultural area in the world – approximately 35.7 million hectares mainly dedicated to fruit, vegetable, and wine cultivation – which theoretically requires less fertilizer. On March 27, a national organization, GrainGrowers, warned that Australia has only six weeks of fertilizer reserves. A bit tight.
Empty kitchens in India
In India, cooking is done with gas (LPG). And 90% of this gas passes through the Strait of Hormuz. So naturally, gas cylinders are starting to run out. On March 12, photos from the Reuters news agency showed hundreds of people in the city of Ahmedabad in the northwest of the country queuing with empty LPG bottles in hand.
A few days later, on March 24, the Indian government approved a decree aimed at «removing obstacles to the construction and expansion» of natural gas infrastructure, in the hope of quickly diversifying its supply.
Electricity rationed in Sri Lanka and the Philippines
In Sri Lanka, the Philippines, and Thailand, rationing is also in place. So everyone is trying to cope as best as they can.
While the Philippines have been in an energy state of emergency since March 24, in Sri Lanka, coal and diesel have been rationed since March 17. On that day, President Anura Kumara Dissanayake confirmed the difficulties in hydrocarbon supply due to the strait blockage. He urged owners of electric vehicles – a market that represents 10% of the country’s automotive fleet – to prioritize recharging at night or through solar panels.
A four-day workweek has been implemented in some provinces, and negotiations are ongoing with Russia and India for oil delivery.
China and Thailand in negotiation
Thailand has breathed a bit easier since March 28, despite air conditioning being turned off at 40°C. According to AFP, the government announced, during a press conference held by Prime Minister Anutin Charnvirakul, that they had reached an agreement with Iran to allow its oil tankers to pass through the strait. A relief for residents affected by soaring fuel prices and forced to limit their movements.
China, also heavily impacted, seems to have started negotiations. During a press briefing on March 31, the spokeswoman for the Chinese Ministry of Foreign Affairs, Mao Ning, confirmed that three Chinese ships had been authorized to cross the Strait of Hormuz in recent days. The blockage deprived them of a significant portion of their supplies: nearly 5.5 million barrels per day, estimated the Institute of International and Strategic Relations (Iris) on April 1.
