Saudi Arabia has warned that interference with Gulf shipping threatens international energy security. Riyadh has spent years building alternatives to excessive dependence upon the Strait of Hormuz. The uncomfortable discovery is that the alternative route towards the Red Sea carries vulnerabilities of its own, leaving one of the world’s great energy-producing regions confronting trouble at both doors.
For decades the strategic weakness of the Persian Gulf appeared obvious. Some of the world’s largest petroleum and gas producers sit behind the Strait of Hormuz, a narrow maritime exit capable of turning a regional military confrontation into an international economic problem almost overnight.
Saudi Arabia invested heavily in reducing that vulnerability. Oil could be moved across the Kingdom towards the Red Sea rather than being sent exclusively eastwards through Hormuz. Pipelines, terminals and alternative infrastructure provided what appeared to be an obvious insurance policy against trouble in the Gulf.
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The present crisis has exposed the limits of that insurance. Threats around the Red Sea and disruption affecting alternative infrastructure have complicated the very routes intended to reduce dependence upon Hormuz. Saudi Arabia has consequently had to move additional crude through its Gulf facilities at precisely the moment when the eastern maritime route is itself under pressure.
The strategic absurdity is difficult to miss. When the eastern door becomes dangerous, send the oil west. When the western route becomes dangerous, send more of it east again. Unfortunately, a country can redirect a pipeline more easily than it can redesign the geography surrounding an entire region.
Saudi Arabia has now taken that concern to the international stage, warning that threats to maritime navigation in the region have implications far beyond the countries immediately involved. Riyadh wants freedom of navigation restored because an oil producer’s ability to pump crude means considerably less if getting that crude safely to customers becomes uncertain.
That distinction applies across the Gulf. Qatar’s enormous gas industry depends upon reliable maritime access. The United Arab Emirates has built ports, aviation, logistics and trade into the foundations of its economic model. Saudi Arabia itself is attempting to diversify beyond petroleum through tourism, manufacturing, investment and logistics.
Every one of those ambitions assumes connectivity. Goods must enter and leave, tourists must travel, ships must sail and investors must believe that regional instability will not repeatedly interrupt the physical infrastructure upon which commerce depends.
The problem therefore extends well beyond the daily price of crude oil. A tanker taking longer to complete a voyage remains unavailable for another cargo. A container ship forced onto a longer route consumes more fuel and ties up capacity. Insurance becomes more expensive and delivery schedules become less reliable.
Enough individual inconveniences eventually become an international cost. Importers build larger inventories because they cannot depend upon delivery dates, manufacturers pay more to secure components and retailers become cautious about ordering stock that may arrive after the season in which it was supposed to be sold.
This is precisely why watching the oil price alone can provide a misleading picture of the crisis. Crude can continue reaching international markets while the system transporting it becomes steadily more expensive and inefficient. Producers can reroute cargoes and traders can improvise, but every additional layer of complexity has somebody’s invoice attached to it.
The consequences matter to Sri Lanka as well. Our location places us close to the great maritime routes connecting Asia, the Gulf and Europe, but proximity does not insulate us from disruption. We import fuel and goods, while our exporters depend upon shipping schedules and competitive freight rates to reach overseas customers.
The greater concern is what happens if disruption ceases to be regarded as temporary. Shipping companies then price it into their operations, insurers incorporate it into premiums and businesses redesign supply chains around the assumption that journeys will take longer. What began as a crisis becomes part of the ordinary cost of trade.
Saudi Arabia’s warning therefore contains a much broader message. The Gulf states can build alternative pipelines, additional ports, enormous storage facilities and sophisticated logistics networks. They can reduce their exposure to individual chokepoints and create redundancies that keep energy moving during emergencies.
What they cannot do is eliminate geography. Eventually every pipeline reaches a coast, every tanker requires a navigable sea lane and every alternative route develops strategic importance precisely because somebody may one day attempt to disrupt it.
For years the international community worried about what would happen if the Gulf’s principal door through Hormuz became difficult to use. The present confrontation is revealing a less comforting reality: the region does possess another door towards the Red Sea, but that door can be threatened too.
The real danger is therefore not simply that Hormuz remains uncertain. It is that the alternatives upon which the world expected to rely when Hormuz became uncertain are themselves no longer guaranteed.
Be that as it may, producing the oil was supposed to be the difficult part. Increasingly, getting it safely out of the neighbourhood may be harder.
