Strait of Hormuz Tensions Raise Energy Security Fears

Escalating conflict between Israel and Iran has prompted some shipowners to avoid the Strait of Hormuz, causing a modest decline in transit and increased freight rates for oil and LNG shipments. The strait remains a vital route, accounting for roughly 20% of global oil consumption and a large share of LNG trade. Indian refiners are exploring alternative suppliers from West Africa amid concerns that a closure could disrupt 40% of India's crude oil imports and 54% of its LNG supply, although industry experts consider a full blockade by Iran unlikely. Economic analysts warn that continued conflict could drive up oil prices, complicating inflation efforts in countries like the UK. Despite the risks, some leaders, including Malaysia’s Prime Minister, believe the conflict might not significantly impact oil markets, highlighting ongoing uncertainty. The situation has introduced significant volatility in global energy and shipping sectors, with governments and industry closely monitoring developments.