Introduction

Located in the north of the Persian Gulf, Bandar Abbas is the biggest commercial and naval port in Iran. Additionally, it is the main entry point for containerised cargo and a primary trade route for imports and exports.

The Strait of Hormuz, on the other hand, is a vital maritime passageway linking the Persian Gulf with the Gulf of Oman and the Arabian Sea. Regardless of Bandar Abbas being one port, the Strait of Hormuz is a competitive international shipping centre, and any disturbances here will have a significant impact on world macroeconomics.

The port of Bandar Abbas is critical to containerised trade in Iran, making it of major importance for customs duties, distribution chains, and non-oil exports. The disruption or destruction at the port can negatively impact the Iranian economy, as the amount of trade decreases, logistics costs rise, customs revenues drop, and supply chain problems arise. Still, overall it is possible to redirect a great deal of the world trade that is taking place now through other regional ports and to minimise the negative consequences for the global economy.          

Approximately one-fifth to one-fourth of maritime oil trade and significant propane exports go through the Strait of Hormuz, which constitutes the most important maritime energy choke point globally. This leads to a situation in which even a slight disruption to operations causes an immediate rise of oil and gas prices, an increase in shipping rates and insurance, growth of inflation, a decrease in manufacturing, and a slowdown in the world economy. As per estimates made by the IMF and the World Bank, any sort of prolonged disruption can lead to a drastic reduction of GDP as well as worsening inflation and food insecurity via increased energy and fertiliser pricing.

Financial Institutions such as the IMF and World Bank have concluded that continued disruptions in Hormuz could lead to one of the biggest energy supply shocks in modern history.

References

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