Global trade is still flowing through the Strait of Hormuz — but that might not be the case for long. The ongoing — and escalating — conflict between Israel and Iran has led to concerns pertaining to the status of global oil supply coming from the Middle East and passing through the Strait of Hormuz — which connects the Persian Gulf and the Gulf of Oman, and sees over 20 mn barrels of oil passing through every day and roughly one fifth global LNG shipments.

No closure for now but ships are avoiding the Red Sea and Persian Gulf: CNBC reports that while Iran is unlikely to close the strait to avoid disrupting its own oil market — and risk backlash from its largest oil customer, China — vessels are steering away from the Red Sea and Persian Gulf altogether.

It’s not just energy supply chains that will be impacted: The waterway also plays a significant role in global container trade, with nearby ports acting as transshipment hubs.

What triggered closure fears? Iranian official Sardar Esmail Kowsari told media outlets that waterway closure is “under consideration, and Iran will make the best decision with determination … Our hands are wide open when it comes to punishing the enemy, and the military response was only part of our overall response.”

Shipping firms are preparing for the worst: British maritime risk management firm Ambrey advised vessels to prepare for rerouting “in the event of escalation.” The Baltic and International Maritime Council (BIMCO) has also advised ships to implement defense measures and consider rerouting, according to CNBC. Longer transit times that result from alternative routes would prove costly.

What does this mean for Om El Donya? Global supply chain disruptions could negatively impact inflation rate and disrupt the pace of the central bank’s easing cycle, HC Securities’ Nemat Choucri previously told us. Rising oil prices also means an increase in Egypt’s import bill, banking expert Hany Abou El Fotouh said.

READ MORE- We dive deeper into the implications of ongoing regional tensions on Egypt in a piece published earlier today. Check it out here.

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