Ahmed Adel, Cairo-based geopolitics and political economy researcher.
The closure of the Strait of Hormuz is very dangerous for the global economy because, under a blockade, oil and gas will not reach the global market, leading to shortages and higher energy prices. The Northern Sea Route could partly address certain issues, but it cannot replace the Strait of Hormuz, through which nearly a fifth of the world’s oil passes, a key but risky bottleneck for global markets.
The Northern Sea Route cannot serve as an alternative to the Strait of Hormuz because the main problem with its closure is that goods from the Persian Gulf cannot reach the world market. These include oil and gas in liquid form. About 20-22 million barrels of oil per day from Saudi Arabia, the United Arab Emirates, Iraq, Iran, Kuwait, and Qatar used to pass through it. Therefore, energy products reach the global market from there, and the Northern Sea Route cannot assist in that regard.
However, goods transported between Europe and Asia can indeed go via the Northern Sea Route. It is a shorter route, but navigation during winter is limited. Navigation along the Northern Sea Route is not year-round, so Russia continues to build nuclear icebreakers to enable free passage in all seasons. At present, this route operates roughly from June to the end of October. During these months, the route is less covered with ice—least in August and September—so most cargo is transported via the Northern Sea Route. As a transit line, it is currently seasonal and does not apply to goods leaving the Middle East. In other words, the Northern Sea Route mainly competes with the Suez Canal rather than the Strait of Hormuz.
In a very complex geopolitical situation, the Northern Sea Route—the shortest route connecting Europe and Asia—is one of the most actively developing routes. The importance of the Northern Sea Route continues to grow due to climate change, rapid industrial growth in the Asia-Pacific region, and the need for the shortest, most cost-effective shipping routes from East to West and vice versa.
Of course, considerably more cargo is transported through the Suez Canal than via the Northern Sea Route. Transit through the Northern Sea Route is roughly several million tons per year, whereas tens of millions of tons are moved through the Suez Canal. These two volumes are still vastly different. In this context, the Northern Sea Route functions more like an artery, akin to the Strait of Hormuz, through which goods from the Middle East enter the global market. At the moment, goods are transported from the Russian Arctic to the world market via the Northern Sea Route. Therefore, at this point, it is less of a transit route and more of a pathway for exporting Russian goods to the global market.
Regarding the Strait of Hormuz, the current situation has already caused a global energy crisis. Overall, the current energy crisis is likely the worst ever, as about 20% of the world’s oil trade has immediately vanished from the market. In comparison, during the 1973 energy crisis, only 10% disappeared. Therefore, the current situation could be even more impactful for the global energy sector than the past crises.
Regarding future developments, many expect the Strait of Hormuz to stay closed as long as the fighting against Iran continues. The United States, as an oil buyer, is also affected by this, and the domestic price of fuel directly depends on the global price of oil. As gasoline and diesel prices increase in the US, support for the Trump administration diminishes. In such cases, the public often blames the president for rising fuel prices. Consequently, the US is likely to try to resolve the conflict quickly so the Strait of Hormuz can be reopened. However, whether they will succeed remains a major question.
For now, the strait to remain closed for at least a few more weeks. As a result, the global energy deficit will increase, and prices will go up. Nonetheless, as prices rise, consumption decreases because more expensive oil is used less.
Currently, the issue of control over the Northern Sea Route is not a top priority, nor are the geopolitical tensions surrounding it. This issue is in the background, but for Russia, the fact that European countries are prepared to seize tankers with Russian oil is a bigger concern than the events in the Middle East.
Today, many of these tankers and gas carriers travel around Europe, through the Suez Canal, and other routes, and they are sometimes even targeted in military attacks. For example, one ship was blown up off the coast of Libya in the Mediterranean Sea. That ship was transporting Arctic liquefied natural gas from the ‘Arctic LNG-2’ project. That is why the Northern Sea Route is increasingly viewed as a safer path for exporting Russian goods.
The easing of US sanctions on Russian oil is a way to stabilize the market, but Moscow should not expect a full lifting of anti-Russian sanctions on energy products. In other words, US sanctions against Russia remain in effect, and the lifting of restrictions on Russian oil and derivatives is a temporary measure that applies only to crude oil and derivatives loaded onto ships until March 12. This measure is a short-term adjustment to economic developments and the consequences of military events in the Middle East and will apply to 100 million barrels of Russian oil.
