Posted on 01/09/2012 9:43:01 AM PST by thackney
INSIGHT, a top international provider of supply chain planning solutions for the world's foremost companies, believes that substantial supply chain problems will result if conflict breaks out in the Strait of Hormuz, through which 20 percent - 30 percent of the world's oil supply passes on a daily basis. Of more immediate concern to supply chain managers is the impact on global oil markets. While the consequences of military action in the Strait would be severe, even the threat of conflict has resulted in significant crude oil price increases in the past few weeks.
Iran threatened last week to stop the flow of oil through the Strait of Hormuz if foreign sanctions were imposed on its crude exports because of its nuclear ambitions, a move that would almost certainly trigger military conflict. Many analysts believe that such threats are baseless, and that closing the Strait would be economically and politically damaging, not only to relations with the West, but also with such powerful neighbors as Saudi Arabia and the UAE.
Nevertheless, recent Iranian military activity in the area, a test of a new missile, and warnings to the US Navy that its carriers must stay out of the Gulf, have ratcheted up tensions significantly.
"The last thing that the world's fragile economy needs is a new confrontation in the Middle East," said Dr. Jeff Karrenbauer, president of INSIGHT. "In the last week, we have seen tensions increase dramatically between Iran and the West. Open conflict in the Strait of Hormuz would be a nightmare for supply chains throughout the world, raising the cost of raw materials, manufacturing, transportation, warehousing, inventory... essentially every component of a supply chain."
Karrenbauer goes on to note the significant disruptions caused by the Japanese earthquake and tsunami and, more recently, the severe flooding in Thailand. Industries such as automobile and electronics have yet to recover. "The evidence is overwhelming that disruption, whether random acts of nature or pre-meditated actions by intelligent adversaries, can have severe economic consequences. In some instances the enterprise itself can be at risk. Nevertheless, we still find that the majority of companies have spent little or no time planning for such contingencies. That is astounding, troubling and frankly, a significant management failure."
INSIGHT's powerful supply chain vulnerability/hardening analytical solution facilitates the identification of vulnerable components of the supply chain. Equally important, it then identifies the optimal design(s) and associated costs best able to mitigate possible disruptions.
Every CEO/COO/CFO should be demanding a comprehensive supply chain risk audit and a corresponding set of mitigation strategies immediately, not waiting to see what happens next. Token committee meetings are no substitute for rigorous planning supported by advanced analytical tools.
They did get this wrong: "20 percent - 30 percent of the world's oil supply passes on a daily basis".
It is closer to 17%. They are likely quoting other source which also confuse the world oil tanker market with the world oil supply.
Ya think? What a dufus! :-)
I think Iran is bluffing and no conflict will happen. If there is conflict, gas prices will spike, and Obama will be toast. That is the LAST thing Iran wants.
Maybe we need the conflict—We have been at “war” with these guys since 1979—maybe we should just have it out with them and have done with it. They could block the strait for a time but we could un-block it in 48 hours. We fight now conventionally or we wait and fight a nuclear war later.
Now we know the brilliant source of the Sh*t Happens bumper sticker and Robert De Niro's line, "this is this" from The Deerhunter.
>> Every CEO/COO/CFO should be demanding a comprehensive supply chain risk audit and a corresponding set of mitigation strategies immediately, not waiting to see what happens next.
Yeah. Right.
What a coincidence that that’s exactly what this company sells?
But seriously, how hard can that analysis be? What does that hallowed region export, except two things: oil, and attitude?
Ya think?
I’ve said this before. Obama needs some kind of International event to boost up his ratings just before the election. If it happens now, it will be his Jimmy Carter moment. He wold rather this happen in October.
If the Iranians do this now, and they will, Obama either backs down, which he will, and he goes heads down weak into another conflict as a bystander like he did in Libya.
Fixed it for ya.
It will be a spot of bother to borrow from our Anglo cousins.
The Iranians import a majority of their refined petroleum. Their refining capacity is mostly on the coast. If they shut down the Straits then we need to make sure they run out of gas.
almonds and rugs
No. The import a significant amount, but closer to 20%.
so insightful..........sarc
All they gotta do is sink a few ships in the right places and the strait is closed for a very long time. Not 48 minutes and not 48 hours.
I guess that depends on the water depth, which I have no current knowledge of.
>> All they gotta do is sink a few ships in the right places and the strait is closed for a very long time.
According to measurements on Google Earth, the Strait of Hormuz is twenty-two miles wide at its narrowest point.
Not sure even a few ships sunk there would do it. I guess it depends on how much of it is navigable to deep-draft ships.
The waters are overall very shallow, with a maximum depth of 90 meters and an average depth of 50 meters.
how much of it is navigable to deep-draft ships.
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not much
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