Australia Facing Potential Crisis amid Strait of Hormuz Blockage
“If the situation does not return to normal by May, the global economy will be hit by a historic crisis.” Alarmist, some internet users have, in recent days, started listing the possible impacts of the blockage of the Strait of Hormuz outside Europe, mainly in Asian and Oceanic countries.
South Korea could move towards a “war economy” and without the strait opening in the coming months, Australians may currently be forced to “ration” to “save agricultural crops.” Countries like Sri Lanka, the Philippines, Thailand, and India have already begun implementing “emergency measures” such as a maximum quota for gasoline purchases and intermittent cuts in air conditioning to reduce energy consumption.
“Economic crisis,” “global recession” – Does the blockage of this single strait truly have the power to paralyze the economies of so many countries?
Fake Off
Struggle in South Korea over Plastic In South Korea, there is no talk of a “war economy”, but real problems concerning the production of certain products are beginning to emerge. This includes trash bags, and more broadly, the entire plastic chain. The Korean Plastic Industry Federation sounded the alarm on March 25, stating that industrial chemists responsible for producing and delivering synthetic resins needed for plastic bag manufacturing have had to scale back.
Not surprising considering South Korea relies entirely on imported oil, with over 60% passing through the Strait of Hormuz for delivery. On March 24, the South Korean president called on the population to implement a series of daily measures – taking shorter showers, only using the vacuum on weekends, and avoiding leaving phones charging all night – to save energy in case the strait blockage continues.
Australia Bracing for Fruit and Vegetable Shortage Australia is indeed gearing up to face supply difficulties, even shortages, of fuel and fertilizers, as reported by many Australian media outlets. The timing is crucial, as the strait blockage coincides with a time when many farmers in the country need to harvest their produce. This is followed by planting seeds and fertilizing the land.
However, without fertilizers, meeting deadlines is impossible. Despite Australia having the world’s largest certified organic agricultural area – around 35.7 million hectares mainly for fruit, vegetables, and wine production – which theoretically requires less fertilizer. On March 27, a national organization, GrainGrowers, warned that Australia only has six weeks’ worth of fertilizer reserves.
Empty Kitchens in India India relies on gas (LPG) for cooking, with 90% of this gas passing through the Strait of Hormuz. Consequently, gas cylinders are starting to run out. On March 12, Reuters photos showed hundreds of people in Ahmedabad, queuing with empty LPG bottles.
A few days later, on March 24, the Indian government issued a decree aiming to “remove obstacles to the construction and expansion” of its natural gas infrastructure in hopes of quickly diversifying its supply.
Rationed Electricity in Sri Lanka and the Philippines Rationing is also in place in Sri Lanka, the Philippines, and Thailand, as everyone tries to cope as best as they can.
While the Philippines has been in an energy 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 fuel supply difficulties due to the strait blockage. He urged electric vehicle owners – representing 10% of the country’s automobile fleet – to prioritize charging at night or via solar panels.
A four-day workweek has been implemented in some provinces, with negotiations underway with Russia and India for fuel delivery.
China and Thailand Making Progress Since March 28, Thailand has breathed a bit easier, despite air conditioners being turned off under 40°C. The government announced an agreement with Iran to allow passage of its oil tankers through the strait, offering relief to residents facing skyrocketing fuel prices and forced to limit their movements.
China, heavily affected, seems to have initiated negotiations. In a press briefing on March 31, the Chinese Foreign Ministry spokesperson confirmed that three Chinese ships had been authorized to pass through the strait in recent days. The blockage deprived China of a significant part of its supplies: nearly 5.5 million barrels per day, as estimated by the Institute of International and Strategic Relations on April 1.
