In recent years, the global geopolitical situation has shown a complex and changeable trend, driving the redrawing of the oil and gas transportation map, and the current main sea transport routes have quietly changed. The latest report from Rystad Energy consultancy points out that the world's five most crucial shipping lanes – the Strait of Malacca, the Strait of Hormuz, the Suez Canal/Manhattan Strait, the Turkish Straits, and the Cape of Good Hope – are currently facing multiple risks such as geopolitical conflicts, navigation safety, and environmental hazards.

It is worth noting that the five major maritime shipping routes undertake the majority of the world's oil and gas shipping tasks. Due to the geopolitical events in the Middle East, there have been significant adjustments in the maritime oil and gas transport routes. For instance, traders who once heavily relied on the Strait of Hormuz and the Strait of Malacca have begun to divert around the Cape of Good Hope or choose pipeline transportation, which not only significantly increases the transport mileage and costs but also poses a continuous pressure on the stability and resilience of the global energy supply chain.

■Capesize Volumes Continue to Climb

Data show that in 2023, the five major shipping routes transported about 71.3 million barrels per day (b/d) of crude oil and petroleum products and about 26 billion cubic feet per day (mmcf/d) of liquefied natural gas (LNG); in 2024, the daily transport volume of crude oil and petroleum products dropped to 65 million barrels, and the daily transport volume of LNG dropped to 24.8 billion cubic feet. Meanwhile, insurance premiums and freight rates have increased significantly.

Mridaar Badwani, a senior upstream research analyst at Rystad Energy, said the five major shipping routes are facing increased risks, posing a severe test to the resilience of the global energy supply chain, and any disruption could trigger extreme energy price volatility and cause significant damage to the global economy.

It is understood that about 3/4 of the global crude oil demand is transported through these five major maritime chokepoints. Among them, the Strait of Malacca, as the world's largest maritime trade hub, accounts for 1/4 of the global crude oil transportation, processing about 24 million barrels of crude oil and natural gas per day. This narrow passage, located between the Indian Ocean and the Pacific Ocean, is a key corridor for most crude oil and LNG transportation to Asia, with Saudi crude oil accounting for 25%.

Meanwhile, the Cape of Good Hope at the southern tip of Africa has become a key alternative route for global maritime trade, currently handling 8% - 10% of global maritime traffic. The volume of crude oil transported through the Cape of Good Hope has declined from 7 million barrels per day (b/d) in 2021 to 6 million b/d in 2023, due to factors such as declining oil production in Africa, and a shift by countries like India to import Russian oil. However, in 2024, the situation changed, and the total crude oil traffic through this channel surged by nearly 50%, as the crisis in the Red Sea led to ships originally traveling through the Suez Canal/Mandeb Strait beginning to divert to the Cape of Good Hope. Approximately one-third of the crude oil transported through the Cape of Good Hope comes from the United States, and nearly one-fourth comes from South America. Additionally, Middle Eastern countries such as Saudi Arabia and Iraq have also diverted a significant portion of their crude oil, originally planned to be transported through the Suez Canal to Europe, to the Cape of Good Hope. Despite higher transportation costs and longer transit times, the Cape of Good Hope is currently one of the safest maritime routes for crude oil transportation compared to other global maritime bottlenecks.

■The strait of Hormuz is hard to shake

Meanwhile, the strait of Hormuz still enjoys an unshakable position, with 1/5 of global crude oil transport, nearly half of the Middle East crude oil and about 14 million barrels of NGL per day, all of which need to be shipped through this narrow waterway to Asia. At the same time, it is also a key route for the shipping of LNG, accounting for 1/5 of the global LNG shipping volume, and 2/3 of Qatar's natural gas production needs to be exported to Asia through the strait of Hormuz.

Miranar Badwani said the Strait of Hormuz, located between Oman and Iran, connects the Oman Gulf in the east and the Persian Gulf in the west, and is the only maritime passage for the shipment of crude oil from the Gulf region to the world, and is a fragile node surrounded by geopolitical storms.

The US Energy Information Administration has proposed that a blockade of the Strait of Hormuz would severely impact countries importing crude oil from the Middle East, thereby causing a significant impact on the crude oil and natural gas supply chain.

To reduce such risks, Middle Eastern countries have been developing alternative transportation routes that bypass the Strait of Hormuz. Reuters reported that Saudi Arabia has an "East-West Oil Pipeline" stretching from the Abqaiq crude oil processing center near the Persian Gulf to the Yanbu port on the Red Sea, with a capacity of 5 million barrels per day; the United Arab Emirates has built the "Abu Dhabi Crude Oil Pipeline" connecting onshore oil fields to the Fujairah export route, with a capacity of 1.8 million barrels per day; and Iran's Goreh Jask Pipeline can directly export Iranian crude oil to the Gulf of Oman.

However, the above-mentioned alternative routes are not enough to fully mitigate all the impacts of the closure of the Strait of Hormuz due to capacity constraints and ongoing geopolitical threats. According to a report by the CBS of the United States, the Iran Goreh Jask pipeline capacity is only close to 300,000 b/d, and it has been shut down since September last year due to operational and political difficulties.

■Geopolitical risks and operational challenges need to be addressed

The Suez Canal and the Strait of Mandeb are key nodes in global maritime transport, and the two are linked through the Persian Gulf, forming a vital maritime route connecting the Mediterranean Sea and the Indian Ocean.

At present, the Mandeb Strait has become the second most important bottleneck in the Middle East and another potential threat to the stability of global crude oil and natural gas trade. This narrow waterway connects the Red Sea with the Gulf of Aden and the Arabian Sea, and is a key route for ships to travel between the Suez Canal and the Indian Ocean. The Suez Canal and the “Suez-Mediterranean Crude Oil Pipeline” of 2.5 million barrels per day connect the Red Sea with the Mediterranean Sea, forming an important corridor for the flow of global energy.

By the end of 2023, the Mandeb Strait accounted for about 12% of the global maritime crude oil trade, but after being affected by geopolitical events in the Middle East, the daily flow through the strait plummeted by nearly 50%, and it has remained below normal levels so far.

The Turkish straits are a narrow and strategically critical maritime route connecting the Mediterranean and the Black Sea, serving as the main transshipment point for the transportation of crude oil and LNG from the Caspian region and Russia to Asian and European markets, accounting for approximately 5% of the global maritime crude oil trade.

In recent years, the crude oil traffic through the Turkish Straits has fluctuated, declining from 3.5 million barrels per day (mbd) in 2020 to 3.4 million mbd in 2021, and further to 3.2 million mbd in 2022 due to the Russia-Ukraine conflict, before rebounding to about 3.5 million mbd in 2023, with little expected change this year. Russia remains the largest contributor to the seaborne crude oil traffic through the Turkish Straits, accounting for 40%, of which about 1/6 is delivered to Turkey.

The market believes that the five major maritime shipping routes are facing different degrees of geopolitical risks, and any interruption or adjustment may trigger a chain reaction, bringing further pressure to the already tense global energy supply chain, and then amplifying the regional security crisis into a systemic risk that impacts the global energy market.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.