Shell Chief Executive Wael Sawan has cautioned that any escalation in the conflict between Israel and Iran could have a major impact on global trade, particularly through potential disruptions in the Strait of Hormuz (a vital corridor for global energy shipments). Speaking at an energy conference in Tokyo, Sawan noted that Shell has contingency plans in place should the situation deteriorate further.
“If that artery is blocked, for whatever reason, it has a huge impact on global trade,” Sawan said, referring to the Strait of Hormuz, through which about a quarter of the world’s oil passes. He also expressed concerns over growing instances of signal jamming affecting navigation systems in the region.
Tensions in the Middle East have already driven up oil prices, with Brent crude rising nearly 1% to over $77 a barrel. The geopolitical instability has also led to a sharp spike in tanker charter rates. According to Clarksons Research, the daily cost to hire a very large crude carrier (VLCC) for routes from the Gulf to China has surged from $19,998 to $47,609 in less than a week, far exceeding the 12% rise seen in the broader Baltic Dirty Tanker index.
Market reactions have shown rising anxiety. Global stock indices slipped on Thursday as investors shifted to traditional safe-haven assets. Gold prices edged up 0.1% to $3,372.36 an ounce, while the U.S. dollar strengthened against the euro and other major currencies.
Adding to the uncertainty, former President Donald Trump said he had not yet made a decision on potential U.S. military involvement in the Israel-Iran conflict. “I may do it, I may not do it. I mean, nobody knows what I’m going to do,” he said on Wednesday.
Market analysts have flagged the possibility of U.S. intervention as a critical variable that could escalate the situation. Kyle Rodda, senior financial markets analyst at Capital, warned that such a move could provoke a direct response from Iran, deepening the regional crisis and further straining global energy supply chains and economic stability.
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