"The creation of a tightly woven, world-spanning economy has also created points of huge stress and tension, where the flows of manufactured goods, people and raw materials that sustain it must pass through the narrow spaces of our globe. These include the 40-mile-wide Malacca strait, a channel for 80% of China's imported oil flows; the Panama canal, only 91 metres at its narrowest point; the Bab el-Mandeb strait, between Yemen and Eritrea, through which 40% of trade between Asia and Europe passes; and the strait of Hormuz, a route for one-fifth of the world's oil."
"When, in 2024, the Panama canal was restricted by drought and the Houthis were blockading Bab el-Mandeb, the combined effect was to contribute 0.6 percentage points, or about one fifth of the global inflation over the year as shipping companies diverted away from both routes."
"An economy built over decades for a globalised world cannot fit into a world where globalisation is falling apart. Accidental, natural or intended, the effect of a blockage on any of these channels is the same."
Iran has launched economic warfare in retaliation for US-Israeli missile attacks, threatening global oil supplies and triggering potential price surges. The world economy, built on tightly interconnected global trade networks, faces severe vulnerabilities through critical chokepoints including the Malacca Strait, Panama Canal, Bab el-Mandeb, and Strait of Hormuz. Disruptions to these narrow passages—whether accidental, natural, or intentional—create cascading inflation worldwide. In 2024, combined restrictions at the Panama Canal and Bab el-Mandeb contributed significantly to global inflation. Britain faces particular pressure as its economy, structured for globalization, struggles to adapt to deglobalizing trends while managing domestic political instability and deteriorating living standards.
#global-supply-chain-vulnerability #economic-warfare-and-geopolitics #oil-market-disruption #deglobalization #inflation-and-trade-chokepoints
Read at www.theguardian.com
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