The United States will implement a naval blockade in the Strait of Hormuz after failed negotiations with Iran over the weekend. The blockade will only apply to ships going to or coming from Iran. Despite this, it could have consequences for France.
On Monday, April 13, a naval blockade of the Strait of Hormuz will be put in place, as announced by President Donald Trump. This blockade comes after negotiations between Tehran and Washington failed over the weekend in Pakistan.
Unexpectedly, this complete blockade of the Strait of Hormuz could potentially be good news for France since the United States promises to only block ships going to or coming from Iran.
However, France does not sell or buy anything from Iran but does trade with other Gulf countries, which would become accessible again. These countries supply 10% of our oil, 5% of our LNG, 15% of our fertilizers, or buy our medicines, food products, and luxury goods.
In summary, if the port of Dubai becomes accessible again, it would be beneficial for French trade.
But in reality, if the strait remains blocked, it will not be resolved immediately. So the supply chain issues we face today may persist in the short term.
A ripple effect on the global economy… and on France indirectly
Iran has other customers who will be penalized, impacting France. The negative impact on France will be felt on global prices.
On oil prices, because Iran’s major customers will have to source elsewhere. This includes Japan, South Korea, China, and India. 80% of Iranian crude goes to these countries. Crude oil jumped by $8 to $103 a barrel on the morning of April 13.
Competition for LNG supply will also intensify, as Europe imports half of its LNG.
And all our imports from Asia will become more expensive if production costs rise. This includes textiles, plastics, steel, aluminum, fertilizers, medications, and more.
This situation could put pressure on our businesses and factories already struggling.
