Global Economy, Trade & Transportation

17 August
After Hormuz, China looks to the promise – and peril – of the Arctic’s ‘ice silk road’
China has established the first scheduled transit through the northern sea route, but questions remain over the environmental and political risks
Jonathan Yerushalmy and Alicia Chen in Taipei
(The Guardian) When Marco Rubio suggested that the world should look to new shipping lanes to bypass the log-jammed strait of Hormuz, it’s unlikely he had the Arctic’s northern sea route in mind.
And yet in recent months the promise of this 5,500km channel – cleaved through frozen seas by nuclear-powered icebreakers and illuminated by a sun that never dips below the Arctic horizon – has grown.
Japan, Korea and India have all expressed interest in sending cargoes through the northern sea route (NSR), but it’s China that has established the first scheduled transit, with shipping company Sea Legend launching a regular service in recent days.
The NSR, which cuts through the Arctic Circle along Russia’s northern coast, is only navigable during warmer months, but that window has widened due to shrinking summer sea ice. For some vessels, the route can more than halve the time it takes to get from China to Europe, but the benefits come with serious environmental and political risks that have the potential to outweigh the gains.

12 August
Gulf Oil Giants Are Spending Billions to Build Ways Around Strait of Hormuz
Even if a cease-fire materializes, Gulf exporters recognize that relying strictly on the Strait of Hormuz is a risk they can no longer take.
(NYT) … Shipping through the Strait of Hormuz, long the most efficient path for exports, remains greatly curtailed because of the war in Iran. Much of the oil getting through the strait is on tankers navigating a treacherous gantlet of Iranian attack drones, or running dark with their location devices turned off. At least 17 seafarers have been killed in the region.
Gulf countries that have for decades produced much of the world’s oil are now intent on breaking their dependence on the narrow waterway. They are building or expanding pipelines and other infrastructure that can bypass it, and vastly expanding storage capacity in places like Asia.

Panama canal fees soar due to Iran war and El Niño as ship ‘pays $4m to jump queue’
Falling water levels linked to weather system are expected to limit number of slots to transit shipping lane
(The Guardian) …commercial ships travelling through the Panama canal are facing a rise in costs amid disruption triggered by the Iran war and falling water levels linked to this year’s intense El Niño weather system.
Highlighting the fragility of global trade, a container ship reportedly paid about $4m (£3m) to jump a queue of vessels waiting to pass through the vital maritime choke point.
Ships are now waiting about 10 days for their turn to pass through the trade route linking the Pacific and Atlantic oceans, the largest backlog since May, according to Argus Media. The route is favoured by shippers as it usually reduces cost and transit times, especially for large retailers and energy companies that trade between Asia and the US.
While shipping companies usually pay a flat fee to reserve a slot to transit the canal, the Panama Canal Authority (ACP), which manages the waterway, also runs daily auctions that allow shipowners to place bids to skip the queue. Starting bids open at about $15,000 for smaller cargo vessels and $55,000 for the largest ships, but these prices can shoot up during times of heavy congestion or high demand.

5-6 August
Gulf states should make a deal with Iran on Hormuz
How to make Iranian blackmail less painful
(The Economist) … Gulf countries are racing to make the Strait of Hormuz obsolete. Saudi Arabia and the United Arab Emirates are both building or expanding oil pipelines to bypass the strait; Iraq plans to divert its barrels north. American and Saudi investors are considering a giant refinery outside the strait. Such workarounds will help. But, as our “Hormuz dependency dashboard” shows, this quest for resilience unfortunately has its limits.
Pipeline projects are often delayed. Yet even if all the plans were completed on time, by 2030, 5m of the 15m barrels a day (b/d) that crossed Hormuz before the war would still have to pass through it. Besides, pipelines can be struck by Iran. Relying on them risks exposing Gulf suppliers to other choke points, not least the Bab al-Mandab strait in the Red Sea where the Houthis, Yemen’s Iran-allied rebels, are firing at ships. Like Iran, they have charged ships fees before and may do so again (though they deny this).

Is Iran Winning the Battle Over the Strait of Hormuz?
Any level of Iranian control would mark a major geopolitical shift in Tehran’s favor.
(Foreign Policy) An agreement to reopen the Strait of Hormuz remained in the works on Thursday, as mediators separately urged U.S. and Iranian officials to come to a consensus on control of the strategic waterway. With Tehran claiming that it is in the “final stage” of drafting a deal with Oman, all eyes are now on Washington to determine what happens next.
The only realistic way out is a deal, however unpalatable. Iran wants to manage the strait jointly with Oman, a more pragmatic government. Negotiating an agreement might give Gulf countries a chance to register their red lines and demands. Gulf countries might have no choice but to pay transit fees. Shipowners would probably tolerate them so long as they did not fall foul of sanctions. That means America needs to be on board.
Such a settlement would probably be fragile. International law says that maritime trade should be safe and free. A multilateral deal involving China, which has an interest in keeping the strait open and could restrain Iran, would be more durable. But that looks unlikely for now. Nor does Iran yet seem ready to accept a return to the status quo in the strait. Still, if a deal, however limited and unbalanced, lowers hostilities and buys Gulf countries time to build workarounds and defences that reduce Iran’s leverage, it will be worth having.

5 August
Iran Says It Is Nearing Final Agreement With Oman on Strait of Hormuz
The agreement on an acceptable route for ships to pass through the strait would effectively ratify Tehran’s control over the crucial waterway.

12 June
The new disorder at sea and the limits of American sea power
Peter J. Dombrowski and Bruce Jones
(Brookings) … The Hormuz crisis is a symptom, not the disease
Since Iran responded to Operation Epic Fury by mining the Strait of Hormuz and threatening to levy tolls, U.S. forces have been unable to fully reopen one of the world’s most critical chokepoints. The operation has drained naval capacity from every theater the roughly 280-ship U.S. Navy serves. It’s not just the expenditure of three years’ worth of Tomahawk missiles at current production rates. It’s ships reassigned, family duty stations changed, at-sea time for crews extended, and wear and tear on ships on extended deployments. Readiness in the Pacific has been eroded, precisely when it may matter most.
The irony is that among the primary beneficiaries of the Navy’s extended deployment in the Strait of Hormuz are China and Northeast Asia. The strategic logic of an American guarantee that protects Chinese oil imports while degrading American readiness in the Western Pacific deserves examination. …
Three overlapping forms of disorder are driving this condition. The first is coercive disorder: the deliberate use of disruption to generate leverage without crossing into open conflict. …
The second is structural disorder: the misalignment between naval power, commercial shipping capacity, and maritime industrial capability across major actors. The United States has the most powerful navy in the world and less than 1% of global commercial shipbuilding output. Europe has strong commercial shipping but diminished naval depth, having lost nearly a third of its main surface combatants since 1999. Between them, the United States and Europe do the lion’s share of work of protecting global maritime flows. Yet China has combined the world’s largest navy by ship count with dominance in shipbuilding, port infrastructure, and maritime logistics—building new warships at a peacetime pace that rivals American output after Pearl Harbor, while continuing to dominate commercial and warship production.
No coalition of like-minded Western states can secure maritime flows coherently when power is distributed this unevenly. Nor is it reassuring that the country aggregating all three dimensions fastest is the one whose strategic ambitions most directly contest the existing order. China’s willingness to support disruptors like Iran and Russia is increasingly evident.

2025

11 July
As Trump Sows Tariff Confusion, Rules of Global Commerce Give Way to Chaos
Blunt letters dictating terms posted to social media and changes late in negotiations have left trading partners wondering what President Trump will do next.
By Jeanna Smialek, Reporting from Brussels
(NYT) Six months into his new administration, Mr. Trump’s assault on global trade has lost any semblance of organization or structure.
He has changed deadlines suddenly. He has blown up negotiations at the 11th hour, often raising unexpected issues. He has tied his tariffs to complaints that have nothing to do with trade, like Brazil’s treatment of its former president, Jair Bolsonaro, or the flow of fentanyl from Canada.
Talks with the United States were like “going through a labyrinth” and arriving “back to Square 1,” said Airlangga Hartarto, the Indonesian minister for economic affairs, who met with U.S. officials in Washington on Wednesday.
The resulting uncertainty is preventing companies and countries from making plans as the rules of global commerce give way to a state of chaos.
Gone is the idea that the White House would strike 90 deals in 90 days after a period of rapid-fire negotiation, as Mr. Trump pledged in April. Instead, Washington has signed bare-bone agreements with big trading partners including China, while sending many other countries blunt and mostly standardized letters announcing hefty tariffs to start on Aug. 1.

10 June
Trump Hails Progress With China, but Details Are Sketchy
Two days of trade talks resulted in what leaders called a framework agreement meant to solidify terms of a truce that the superpowers reached in Geneva last month.
President Trump said Wednesday that the United States and China had struck a deal to roll back some of the punitive measures they had taken against each other’s economies in recent months, including his administration’s recently proposed restrictions on Chinese students attending U.S. universities.
The agreement followed two days of marathon negotiations in London, and will return the countries to the terms of a trade truce they had reached in May, after weeks of escalating tensions between them.