“If the situation does not return to normal by May, the global economy will be hit by a historic crisis.” Alarmed, some internet users have, in recent days, started listing, in several social media posts, the possible impacts of the blockade of the Strait of Hormuz outside of Europe, mainly in Asian and Oceanic countries.
South Korea could shift to a “war economy,” and without the strait opening in the coming months, Australians would 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 fuel purchases and intermittent air conditioning cuts to reduce energy consumption.
“Energy crisis,” “global recession” – does the blockade of this one 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 no talk, for now, of a “war economy,” but real issues regarding the production of certain products are beginning to emerge. This is particularly the case for garbage bags, and more generally for the entire plastic chain. The Korean Federation of Plastic Industries sounded the alarm on March 25, stating that chemical industry professionals responsible for producing and delivering synthetic resins needed for plastic bag manufacturing had to scale back.
Not surprising since South Korea entirely imports its oil, more than 60% of which must pass through the Strait of Hormuz to reach port. On March 24, the South Korean president called on the population to implement a series of daily measures – take shorter showers, only use the vacuum cleaner on weekends, and avoid leaving phones charging all night – to save energy, in case the strait blockade continues.
Shortage of fruits and vegetables in Australia
Australia is indeed getting organized to face supply difficulties, even shortages, in fuels and fertilizers, as reported by many Australian media outlets. It’s a matter of timing. The strait blockade occurs at a time when many farmers in the country need to harvest their produce. This is followed by seeding and land fertilization.
However, without fertilizers, it’s impossible to meet deadlines. This is the case even though Australia has the largest certified organic agricultural area in the world – about 35.7 million hectares mainly dedicated to growing fruits, vegetables, and wine – which theoretically requires less fertilizer. On March 27, a national organization, GrainGrowers, warned that Australia only had six weeks’ supply of fertilizers, which is cutting it close.
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, the 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, lining up 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 its natural gas infrastructure, hoping to quickly diversify its supply.
Rationing of electricity in Sri Lanka and the Philippines
In Sri Lanka, the Philippines, and Thailand, rationing is also in effect as everyone tries to cope as best as they can.
While the Philippines have been in an energy emergency state 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 blockade. He asked owners of electric vehicles – a market that represents 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, and negotiations are underway with Russia and India for oil delivery.
China and Thailand in negotiation
Thailand is seeing some relief since March 28, despite air conditioners being turned off at temperatures above 40°C. According to AFP, the government announced during a press conference led by Prime Minister Anutin Charnvirakul that they had reached an agreement with Iran to allow their oil tankers to pass through the strait. A relief for residents facing soaring fuel prices and forced to limit their movements.
China, also significantly affected, seems to have opened negotiations. During a press briefing on March 31, the spokesperson for the Chinese Ministry of Foreign Affairs, Mao Ning, confirmed that three Chinese vessels had been allowed to pass through the strait in recent days. The blockade deprived them of a significant portion of their supplies: nearly 5.5 million barrels per day, estimated the Institute for International and Strategic Relations (IRIS) on April 1.
