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The oil market and the fertilizer market have been essentially broken by the closure of the Strait Of Hormuz. But it's not just that. With war in The Middle East, cracks are forming in the shipping industry itself, particularly the tanker market that transports crude oil and refined products around the globe. My guest today lives and breathes shipping. Ed Findlay Richardson began thinking hard years ago about what a closure of the Strait could do to shipping markets and the opportunities it might create for shipping investors. With shipping prices surging two x, three x, in some instances, 10
Thank you.
The conflict in The Middle East has caused the price of oil, refined products, and many other things, including fertilizer, to skyrocket. Many people know that, but what my people might not be as aware of is that shipping has gotten a lot more expensive as well. How would you describe the closure of the Strait Of Hormuz? How has it affected shipping availability and pricing within the Strait and then worldwide?
Well, I think the first thing to highlight is that the Middle Eastern Gulf is really the epicenter of a lot of commodities trades, in particular having to do with energy. And we've just taken for granted that, yes, there is a choke point, but that trade has always been fluid through it, has never been, disturbed for longer periods of time. There's been a conspicuous example of a war in the nineteen eighties, but trade was still able to continue. So we had price shocks, but never quite anything like we have right now. And I think markets had discussed this. They had talked about it. Even I had
In your career or the careers of your your mentors who are twenty or thirty years older, has there ever been something like this? How does this compare? Just how drastic is the situation? And precisely, you know, what and then we'll get into what is going on and where where the prices are are going up the most.
I think what's really unusual about what's happening now is that normally these shocks are relatively short lived. So you'll see some events, like, for example, when the Houthis attacked the largest Saudi oil field in 2019. That was an event which sent spot rates for the largest crude carriers from something like $30,000 a day to over $200,000 a day in the span of a week. So it was extreme. And just as quickly as it went up, it dropped. So, actually, the reason why tanker freight rates went up so much is because US Treasury sanctions, blanket sanctions, one of the biggest tanker companies in t
So you have to go all around Europe, all around Africa. It's a it's a long trip.
It's a long voyage. Yeah. Now some of those operators, part of what we call the dark fleet, are actually they feel safe going through the Red Sea, some other words, through the Suez Canal, and they they shave off about twelve days by doing that. But I think that, getting back to the kind of the crux of your question, what's unusual about what we're seeing now is we could imagine this persisting a lot longer. And that's something which, you know, it's it's kinda like the way that when oil spikes these days, you have all these speculators who rush in to sell the volatility because they just assu
How many ships roughly are going through the Strait Of Hormuz per day? I know it's higher than zero, but well below the a 150, you know, before before this crisis. And just how just how damaging and disruptive is that? And and and talk about the that disruption.
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