The Chokepoint Economy- High Costs, Months to Repair

And we ordinary people will be paying for it all.

**Good read- War, Inflation, and the Hidden Costs of Closing the World’s Most Important Strait

The article actually talks about 2 chokepoints, excerpts below, read entirely at link above

I want to talk about the thing nobody in Washington seems willing to say out loud, which is that the cost of this war is going to show up at your kitchen table before it shows up in any congressional budget hearing.

But I’m not writing about the war. Not really. I’m writing about what the war is doing to the invisible infrastructure of the global economy, the shipping lanes and insurance markets, fertilizer contracts, and airfreight corridors that nobody thinks about until they break.

Because they’re breaking right now, in ways that will take months to repair, and the people who will pay for it aren’t the ones making the decisions.

The Chokepoint

The Strait of Hormuz is 21 miles wide at its narrowest point. Through that gap moves roughly 20 percent of the world’s oil, about 20.9 million barrels per day. It also carries a significant share of global liquefied natural gas, a third of the world’s seaborne fertilizer exports, and a meaningful slice of container traffic linking Asia, Europe, and the Middle East.

It is, as of right now, essentially closed.

Not formally. Nobody has dropped a chain across it. But Iran’s Revolutionary Guard declared the waterway shut to allied shipping.

Protection and indemnity insurers pulled coverage. War-risk premiums, which had already tripled in the days before the strikes, became irrelevant once insurers stopped offering any coverage at all.

And without insurance, no shipowner will send a vessel through. It’s not the missiles that closed the Strait. It’s the actuarial tables.

Tanker traffic through the Strait of Hormuz has dropped from an average of 138 vessels per day to roughly two.

One hundred and fifty tankers are sitting at anchor in open Gulf waters.

One hundred and forty-seven container ships are trapped inside the Persian Gulf, unable to exit.

Maersk, CMA CGM, Hapag-Lloyd, MSC, every major container line, has suspended operations. Maersk paused two key services linking the Middle East to Asia and Europe and halted all trans-Suez sailings through the Bab el-Mandeb Strait.

The Houthis, who had eased up on Red Sea attacks in recent months, announced they’re resuming. So now both chokepoints are closed, and the only way around is the Cape of Good Hope, which adds 10 to 14 days to every voyage.

This is what a dual chokepoint crisis looks like. It’s never happened before in modern container shipping.

Let me put this in dollars.

LNG shipping charter rates went from $40,000 a day to $300,000 a day in less than a week. That’s a 650 percent increase.

Asian spot LNG prices doubled.

Qatar halted all LNG production at its Ras Laffan hub, the largest LNG export complex on Earth, after Iranian drones hit facilities there, and declared force majeure on its contracts.

Qatar and the UAE together supply roughly 20 percent of the world’s LNG, and 85 percent of Qatar’s exports go to Asia.

The Oil Shock You Were Promised You’d Never See Again

Crude oil has risen roughly 50 percent since February 28. That’s not a typo.

Brent was trading around $70 a barrel before the strikes. It touched $119 overnight. (it has since come down)

WTI has moved from $67 to over $115.

Iraq, the second-largest OPEC producer, has seen output from its three main southern oilfields collapse by 70 percent, from 4.3 million barrels per day to 1.3 million, because there’s nowhere to put the oil.

Kuwait has cut production preemptively. The UAE is “carefully managing offshore production levels.”

Everyone in the Gulf is producing less because the tankers can’t get out.

Meanwhile, Israel struck a major fuel storage facility near Tehran over the weekend.

Saudi Arabia’s 550,000-barrel-per-day Ras Tanura refinery has been hit twice. Drones even targeted Saudi Aramco’s million-barrel-per-day Shaybah oil field.

We are watching the physical destruction of energy infrastructure in real time, which means this isn’t just a shipping problem. Even when the Strait reopens, some of this supply isn’t coming back quickly.

Did Donald Trump and Bibi Netanyahu consider these realities before striking Iran? Or was their hubris so great, they didn’t consider the possibility that Iran wouldn’t fall immediately?

Did Trump consider he would end up having to ease Russian oil sanctions in an attempt to try to keep global oil prices down?

**Trump eases Russian oil sanctions as Iran war sends prices spiking

The United States has temporarily lifted sanctions on Russian oil, a boost to the Kremlin as Washington tries to contain energy prices sent soaring by the American-Israeli assault on Iran.

The announcement failed to immediately calm oil prices, which have spiraled since Tehran effectively closed the vital Strait of Hormuz oil chokepoint and began attacking energy facilities across neighboring Gulf countries.

The international benchmark of Brent crude rose again overnight, sitting just above $100 a barrel as of 6 a.m. ET. Markets worldwide slipped, with U.S. stock futures down following slumps across Asia and Europe.

Announcing the move Thursday evening, Treasury Secretary Scott Bessent said that until April 11 countries would be able to buy Russian oil that was already at sea.

That moves seems really at odds with the US sanctions regime.

**Europe Negotiating With Iran For Oil Access Through Strait—As U.S. Still Blocked—Report Says

Specifically France and Italy.

France and Italy have reportedly opened talks with Iranian officials in hopes of negotiating a deal to allow their vessels through the Strait of Hormuz after a weekslong standstill in the shipping lane has wrecked havoc on global energy markets.

**Drone attacks strike Italian and French military bases in Iraq amid Iran’s regional retaliation

Italy and France have maintained occupying forces in the Kurdish territory of Iraq for decades now

In a surge of violence linked to Iran’s broader retaliation against U.S. and Israeli strikes, drone attacks targeted military bases hosting Italian and French forces in northern Iraq’s Kurdistan region on Thursday.

While the strike on the Italian base at Camp Singara in Erbil caused only material damage with no casualties, a subsequent attack in the nearby Makhmour area wounded six French soldiers and killed one officer, escalating concerns over the safety of international coalitions in the region.

The Italian incident occurred overnight on 11-12 March, when a drone struck Camp Singara, a facility near Erbil International Airport that hosts 141 Italian soldiers as part of Operation Prima Parthica. This mission, integrated with the U.S.-led anti-ISIS coalition and NATO’s Iraq operations, focuses on training, assisting, and supporting Kurdish Peshmerga and Iraqi forces, alongside logistics and protection duties

Italian Defense Minister Guido Crosetto confirmed via X no victims or injuries among military personnel, though the attack caused material damage, including the destruction of a logistics vehicle.

***U.S. to send 2,500 Marines to Middle East as Iran, Israel continue to exchange attacks

Meanwhile, a U.S. official told The Associated Press that roughly 2,500 Marines and at least one amphibious assault ship were headed for the Middle East in a major addition of troops.

The US military has seen more casualties..

Did Trump and Bibi even consider any alternative scenarios, costs, damage to the global economy and worse before launching this attack? The fact they have made the offer to Russia to ease up on sanctioned oil, suggests, they didn’t consider all possibilities.

Thoughts, please?