Global Shipping Gridlock: Conflict and Climate Disruptions Paralyze Key Trade Routes

The global shipping industry is facing unprecedented disruptions due to conflict and climate-induced droughts. The Strait of Hormuz, which accounts for 20% of the world's oil trade, remains closed following Iran's response to a US-led attack in March.

In the Bab el-Mandeb Strait, Ansar Allah (also known as the Houthis) has escalated its conflict with Saudi Arabia, causing ships to divert around Africa despite added costs. This is not a new tactic for the Houthis, who have been using this strategy since November 2023.

The Panama Canal, which relies on artificial lakes filled by rainwater, is experiencing drought-related issues, limiting the number of ships it can handle each day to just ten. Shippers must now wait or pay a premium to skip the line.