Stamatis Tsantanis, Chairman & CEO of global shipping company Seanergy Maritime and United Maritime says the closure of the Strait of Hormuz has already led to a four to five times increase in freight rates for tankers and significant shortages in the global supply chain. He says 3200 ships are at a complete standstill in the region, each carrying a million barrels of oil.

“You have a sizable percentage of the global fleet being trapped in that area [Gulf of Hormuz], which means that there aren’t enough ships around the world, so rates are going up.

At the same time, you have oil shortages because there’s no way to ship the oil coming out of the Arabian Gulf. That has led to a significant increase in the price of oil and freight rates for tankers—up four or five times from already very high, very elevated levels.

In the global supply chain, sooner or later there will be significant shortages, especially in crude oil. Given the fact that a lot of Asian countries, like Japan and Korea are very much dependent on Arabian Gulf oil, they need to find alternative sources.

The insurers will continue coverage on ships that are already in the area, but they are denying coverage for ships that are willing to play pirates and enter the area and get high rates. There are certain shipowners in the world who say, “I’m going to do it.” That’s always the case in these kinds of situations, where people take risks and potentially risk the lives of crew members and the ship itself.

Impact if Conflict is Prolonged:

You have a lot of dry bulk ships, not as many and not as crucial as oil, but still a substantial number—around 2.5% of the global fleet. Oil will need to come from longer distances, prices will go up, and strategic reserves will need to be opened to ease the crisis.”

Seanergy is a capesize shipping company focused on dry bulk shipping, moving nearly 20 million tons of raw materials every year—including iron ore, bauxite and coal.

Source: By Stamatis Tsantanis, CEO, Seanergy Maritime and United Maritime