Posted on 01/28/2011 10:53:49 AM PST by FromLori
Shockingly, the "pundits" have suddenly realized that courtesy of the upheaval in Suez, the canal with the same name may be closed, which would wreak havoc on shipping costs. Once again, Zero Hedge was just ahead of the curve: "Egyptian Stock Market Plunges Over 11% To Fresh Multi-Year Lows; Is A Suez Canal Transit Halt Imminent?" The just announced countrywide curfew will not make Suez Canal operability any easier. For those who are concerned about what a Suez closure means, we recreate what we wrote previously on the topic. And just in from Reuters, Energy Secretary Steven Chu has declined to say if he is worried Egypt protests may disrupt Mid-East oil, but believes that serious disruptions will have oil prices. By harm he means make them surge higher.
From Egyptian Stock Market Plunges Over 11% To Fresh Multi-Year Lows; Is A Suez Canal Transit Halt Imminent?
And while the important part of the world may ignore what is happening in Egypt, after all it is not US banker money thay is being lost, they may want to consider this: according to reports, there has been live fire in Suez, where the police headquarters have been taken over. More importantly, according to the Guardian, we may see the first army insubordination in this city: "a lawyer and executive director for the Arabic Network for Human Rights Information, has tweeted that some army units in Suez are refusing to support the crackdown against the people." Which means the government may be about to lose control over Suez... And the Suez Canal.
(Excerpt) Read more at zerohedge.com ...
*facepalm*
Financial Times, London.
What about the effect on Chinese exports to Europe? Less important than on oil, but...
A closure of Suez would hurt the mid-east and India, much more than the West or Asia, which I doubt would be effected at all, except for short-term market spikes.
Commodities like oil, minerals and grains for “long-distance” haulage travel by VLCC’s, or for dry cargo - Cape-Size vessels. These go around Africa rather than through the Suez Canal. These are huge vessels and price per ton of cargo is much lower, and they have been the norm for nearly 2 decades now.
I expect an Iranian demonstration of ability to detonate a nuclear device forthcoming.
If speculator’s start buying it up though it will increase here to won’t it?
You assume that “we” keep getting our normal supplies of energy etc, and nations whose shipping uses the Suez Canal go without.
It doesn’t work that way. Disruptions affect us all, in supply, market distortions/diversions, and especially in prices.
Sometimes even in “friendships” and “alliances” being tested or abandoned.
I hope Stuxnet took care of that but what about here? Who knows how many of them hide amongst us did you see that terrorist book found in the desert article?
Sure, there will be disruptions and price spikes, and that is the nature of any crisis. Deal with it, and it will go away in 6 months. But it won't stop the overall movement of commodities, nor will it hurt transport capacity where it matters. They key point is - the Mid-East, outside of Israel, is inherently unstable and not prone to any kind of management or control, no matter who is President of the USA. The Suez has been closed already 3 times in the last 50+ years. It will happen again.
Divide and conquer works every time.
This is why the GCC countries need to make peace with Israel. Run a rail line from Kuwait and Saudi and even Iraq through Jordan and into Israel. Offload goods in the Gulf, send them by train to Israel, then ferry them to Italy or Greece for importation into Europe.
Once Iran becomes capitalist and democratic India and the far east could be linked into this train line and the old spice trade route will be reactivated.
(yes, there is a joke or two in there).
Several decades back Qadaffi surreptitiously dumped a few mines in the Suez and caused havoc with shipping until minesweepers could be found, repositioned and employed. That was short term. And that was Qadaffi being Qadaffi- not an islamic Egypt at civil war.
The term Suezmax is used to describe the ships that can make it.
The original question was - what would happen to the flow of economic materials? My answer - not much. But as you point out with regards to US deployments there - there are no good options. its the danger inherent in pretending that we can control Mid-East dictators and Islamists by showering them with money, apologizing to them, or even having NASA tell them how wonderful they are.
What are the options? Sieze the Suez Canal? sorry - not interested.
Willie, is that you?
Canal was closed from 67 to 75. Result.....the world built bigger ships to round the Cape.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.