STEVE INSKEEP, HOST:
We're reporting this morning on a predictable consequence of the U.S. and Israeli war on Iran. Apparently, when you launch a war in one of the world's most important oil-producing regions, it affects the global supply and price of oil. Oil tankers are not risking the passage out of the Persian Gulf past the Iranian coastline at the Strait of Hormuz. That, plus Israeli strikes on Iranian oil facilities and Iranian strikes on neighboring countries have sent oil prices soaring. In a moment, we'll hear the implications for the world economy. We begin with consequences for Middle Eastern nations, which are also unable to bring supplies in through the Gulf. Here's NPR international affairs correspondent Jackie Northam.
JACKIE NORTHAM, BYLINE: It's difficult to overestimate the importance of the Strait of Hormuz. Roughly a fifth of the oil and liquefied natural gas consumed across the world each day passes through the narrow waterway. Container ships represent a much smaller global percentage - about 3% - but they're carrying vital cargo - aluminum, fertilizer and food to the Middle East.
MATTHEW WRIGHT: Ninety percent of its food is imports, particularly on the fresh side.
NORTHAM: Matthew Wright is lead freight analyst at Kpler, a global trade intelligence provider. He says, at the moment, container ships are staying away from the Strait of Hormuz because of the security risk.
WRIGHT: The fact that those cargoes are not able to go in, this could be a fairly critical issue for the region.
NORTHAM: Wright says a container ship came under attack last week. The crew abandoned ship. It's been adrift since.
WRIGHT: Significantly, a tug from the UAE went out to assist it and was hit by a missile, killing everybody on board.
NORTHAM: There are roughly 120 container ships in limbo in the Gulf region. Shipping companies, including giants like Maersk and Hapag-Lloyd, are suspending some routes because of the risk. Jonathan Roach, an analyst at Braemer ACM shipbroking in London says shipping companies are not accepting new bookings for the foreseeable future.
JONATHAN ROACH: They don't want any more distressed cargoes. And there's so much uncertainty in terms of timing, they'll have to handle and mitigate the cargo that's already on the water.
NORTHAM: Peter Tirschwell, a maritime trade specialist at IHS Markit, a global information and analytics firm, says the shipping industry is designed to be a circulating system of ships coming and going, containers being loaded and unloaded. Tirschwell says the situation in the Strait of Hormuz is scrambling that.
PETER TIRSCHWELL: Containers with goods, empty containers, are going to get out of position. They're going to pile up at ports. They will slow down in terms of their productivity and their fluidity. Ships will be idled. From a market standpoint, massive amounts of capacity will get pulled off of the market and freight costs will go up.
NORTHAM: Add on top of that, the soaring cost of insurance - if a shipping company can get it. Jonathan Roach with Braemer says Iran understands that the odd missile attack or the threat of one can strangle maritime traffic in the Strait of Hormuz and is using that as a weapon.
ROACH: Really, the shipping part of it is now being used perhaps more of as a lever. Iran is very aware that this bottleneck or this - you know, the strait is a lever for them to pressure during this conflict, so they're not likely to stop.
NORTHAM: President Trump says he wants the U.S. Navy to escort tankers and ships through the Strait of Hormuz. Matthew Wright with Kpler doesn't think it'll work. He says it had little impact when the Navy tried to protect ships from attacks by Yemen's Houthis in the Red Sea.
WRIGHT: Iran is far more sophisticated from a military point of view in its ability to target moving vessels.
NORTHAM: And Wright says, in fact, traveling alongside a U.S. naval vessel might make it more of a tempting target for Iran. Jackie Northam, NPR News. Transcript provided by NPR, Copyright NPR.
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