Global trade under threat: Repercussions of key maritime routes closure

There is no doubt that closing maritime routes to Israel could be a devastating blow.

Israel imports 99% of its necessities through its maritime routes: 30% via the Red Sea (Eilat Port) and 70% via the Mediterranean Sea. The closure of Bab el-Mandeb has become a strategic move by Houthis, pressuring Israel to halt its actions in Gaza.

Furthermore, the Iranian Revolutionary Guard has threatened to cut off the Strait of Gibraltar.

Economically, can Israel be isolated without creating a global trade crisis and causing harm to the rest of the world? Unlikely.

Firstly, let us examine the repercussions of security incidents in the Red Sea, which have been ongoing for the past two weeks.

This waterway is the fastest maritime route between Asia and Europe, with around 20,000 ships passing through annually. It facilitates 12% of global maritime trade, including raw materials, essential goods, grains, and approximately 12% of globally transported oil, especially from the Arabian Gulf to West Asia and Europe.

However, due to Houthi attacks, maritime activity has decreased by over 40%, with major shipping companies refraining from using this route.

Over 100 ships have been forced to take longer alternative routes around Africa at Cape of Good Hope, extending shipping times by two to four weeks and raising shipping costs. For example, container costs from Shanghai to Europe have surged by 45%, ultimately borne by consumers.

According to analysts, the current impact remains acceptable, and shipping costs are lower than during COVID-19. 

Nevertheless, should the crisis intensify, it may lead to further price hikes, causing shortages of essential and raw materials in many countries.

The crucial question arises: What if Iran follows through with its threat to close the Strait of Gibraltar?

The consequences will not be limited to Israel alone; the world will plunge into a larger economic crisis.

The Strait of Gibraltar connects all maritime trade between the Mediterranean Sea and the Atlantic Ocean, linking Asia, Africa, Europe, and the Americas. Approximately 60,000 ships pass through it annually, representing 10-15% of global maritime trade, one-third of oil, and 20% of global consumption.

Faced with these numbers, can Iran execute such a threat without affecting all these nations?