“If the situation does not return to normal by May, the global economy will be hit by a historic crisis.” Alarmist, in recent days, some internet users have started listing, in several posts on social networks, the possible impacts of the blockage of the Strait of Hormuz outside of Europe, mainly in Asian and oceanic countries.
Thus, South Korea could transition to a “war economy” and without the reopening of the strait in the coming months, Australians would currently be forced to “ration themselves” to “save agricultural crops.” Countries like Sri Lanka, the Philippines, Thailand, and India have already started implementing “emergency measures” such as a maximum quota for purchasing gasoline and intermittent cuts in air conditioning to reduce energy consumption.
“Energy crisis,” “global recession”… Does the blockage of this single 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 concerning the production of certain products are starting to emerge. This is particularly the case with garbage bags, and more generally with the entire plastic chain. The Korean Plastics Industry Federation alerted on March 25. It announced that chemical industry members responsible for producing and delivering the synthetic resins needed for plastic bag production had to scale back.
This is not surprising as South Korea imports all of its oil, more than 60% of which must pass 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 daily measures, such as taking shorter showers, only using the vacuum cleaner on weekends, or avoiding leaving mobile phones charging all night – to save energy, in case the strait blockage lasts.
Shortage of fruits and vegetables in Australia
Australia is indeed organizing itself to cope with supply difficulties, even shortages, of fuels and fertilizers, as reported by numerous Australian media. The timing is crucial. The strait blockage occurs at a time when a large part of the country’s farmers need to harvest their crops. This is followed by planting and fertilizing the land.
However, without fertilizers, meeting deadlines is impossible. This is the case even though Australia has the largest certified organic agriculture area in the world – about 35.7 million hectares mainly dedicated to fruit, vegetable, and wine production – which theoretically requires less fertilizer. On March 27, a national organization, GrainGrowers, warned that Australia only has 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, lining up with empty LPG bottles in hand.
A few days later, on March 24, the Indian government approved a decree aiming to “remove obstacles to the construction and expansion” of its 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 they can.
While the Philippines have 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 difficulties in hydrocarbon supply due to the strait blockage. He asked owners of electric vehicles – a market that represents 10% of the country’s car fleet – to prioritize charging at night or via photovoltaic 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 negotiations
Only Thailand has breathed a bit easier since March 28, despite the stoppage of air conditioning at temperatures above 40°C. According to AFP, the government announced during a press conference by Prime Minister Anutin Charnvirakul that it had reached an agreement with Iran to allow its 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 conference on March 31, the spokesperson of 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 blockade deprived it of a significant portion of its supplies: nearly 5.5 million barrels per day, estimated the Institute of International and Strategic Relations (IRIS) on April 1.
