Water Woes & Global Maritime Arteries: Climate and Conflict Threaten Vital Chokepoints

The world’s largest shipping gateway, the Panama Canal, has been making headlines due to its draft issues once again. As per reports, a combination of climate change and structural factors have posed significant challenges to the maritime trade passing through this essential canal.

News reports suggest that climate change has significantly impacted the water levels of Lake Gatun, one of the two natural lakes in the Panama Canal system. This has resulted in bringing down the average water level of the canal. As per the Panama Canal Authority (ACP), the average water level for February currently stands at 80.3 feet, showing a sharp contrast with the five-year moving average of 83.9 feet around this time of the year. Although the difference may appear modest, it’s essential to note that over the past five years, the lowest average lake levels have typically been recorded in May, averaging at 82.5 feet.

This trend paints a concerning picture for the future of transits through the Panama Canal, as it accounts for the passage of more than 40 million tons of goods every month and contributes 5% to the global maritime trade. This makes the artificial 82-kilometer waterway one of the world’s most vital intercontinental waterways for trade, particularly along the routes connecting the Americas and Asia.

But this is not the only essential artery for maritime trade. Let’s take a look at the importance of some of the other essential arteries or chokepoints in the world.

Suez Canal:

Located in Egypt, this artificial sea-level waterway is another essential trade route that connects the Red Sea with the Mediterranean Sea. Apart from this, it also connects Egypt’s four most important lakes, namely, Lake Manzala, Lake Timsah, Great Bitter Lake, and Little Bitter Lake.

The Canal accounts for almost 15% of the global maritime trade and 30% of the global container trade and provides the shortest trade route between Europe and Asia, making it extremely important for both continents.

If not for the Suez Canal, ships would have to travel an additional 6,000 km from Europe through the Mediterranean Sea and the Atlantic Ocean to the Cape of Good Hope to enter the Indian Ocean, making trade through the sea not only time-consuming but also expensive.

Essential for oil-exporting countries, the importance of this maritime route was realized in 2021 when Ever Given closed the Swiss Canal for six days, resulting in trade worth $110 billion coming to a standstill.

Strait of Gibraltar:

The Strait of Gibraltar is located between the African country of Morocco and the European country of Spain. Connecting the Mediterranean Sea with the Atlantic Ocean, this maritime route is about 60 kilometers long and between 14 and 44 kilometers broad.

Amongst the busiest waterways in the world, the strait sees more than 120,000 ships, and about 20% of the global cargo passes through it each year. Nations like Algeria, Egypt, Turkey, Greece, Italy, and France utilized this important strait to facilitate trade on the American continent.

The blockage of the Strait of Gibraltar will put pressure on the very narrow Suez Canal, adding more ships than it can handle. While through the Swiss Canal route, the nations will have easy access to the market of Asia, reaching the market of the American continent will be both heavy in time and cost.

Strait of Hormuz:

One of the world’s most strategically important choke points, the Strait of Hormuz, is located in the Middle East, bordering Iran, the United Arab Emirates, and Oman. It connects the Persian Gulf and the Gulf of Oman, providing the only sea passage from the Persian Gulf to the open ocean.

About 167 km long, with a width varying from about 96 km to 39 km, the Strait of Hormuz is one of the most important oil trade routes in the world, as approximately 21% of global petroleum trade passes through the Strait of Hormuz. In 2022, its oil flow averaged 21 million barrels per day (b/d), or the equivalent of about 21% of global petroleum liquid consumption.

The Strait holds great strategic importance as it is the only trade route present in the region, with the only alternative being the East-West Pipeline. While the East West Pipeline gives access to the Red Sea from Saudi Arabia by crossing Bab-El-Mandeb and the Gulf of Aden, or through the Red Sea, the Arabian Sea can be reached through the Swiss Canal, crossing into the Mediterranean Sea, but the limited capacity (transporting only 5 million barrels of oil per day) of this pipeline poses great challenges. Thus, the blockage of the Strait of Hormuz can lead to a global energy crisis and a rapid increase in the price of crude oil.

In the past, the mere threat of closing the strait has resulted in a spike in the price of crude oil.

Bab-El-Mandeb Strait:

Also called the Gate of Grief or Tears, the Bab-El-Mandeb Strait is located between Yemen on the Arabian Peninsula and Djibouti and Eritrea in the Horn of Africa. It connects the Red Sea to the Gulf of Aden and, by extension, the Indian Ocean. The strait, at its narrowest point, gives access to countries like Israel, Jordan, Egypt, Saudi Arabia, Sudan, Eritrea, Djibouti, Somalia, and Yemen.

With a width of only 29 km, the strait witnesses the trade of about 7.80 million barrels of oil every day. Not only this, it accounts for 12% of global oil trade by sea and 8% of LNG, i.e., liquefied natural gas.

The Bab al-Mandeb Strait holds strategic significance for Israel, providing a crucial trade route to Asia despite its access to the Mediterranean Sea. However, the Israeli-Palestinian conflict, leading to attempts to disrupt trade by blocking the strait, has escalated tensions for the nation.

The strait also holds great importance for India as it is heavily reliant on this trade route for commerce with the Middle East, Africa, and Europe, which faced significant consequences due to the increased attacks by Yemeni militants. India, a major regional importer of crude oil and LNG, is experiencing trade disruptions as a result of the ongoing conflict. However, now the nation on advisory from the Global Trade Research Initiative (GTRI) is exploring alternative routes, like Iran’s Chabahar port, to reduce dependence on the Bab al-Mandeb Strait.

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