GEOPOLITICAL DISRUPTIONS AND ECONOMIC VULNERABILITIES: IMPACT OF A POTENTIAL STRAIT OF HORMUZ BLOCKADE ON GLOBAL FINANCE AND AGRICULTURAL SUPPLY CHAINS

Abstract

The Strait of Hormuz, which sees 20-21 million barrels of oil transported every day, is a key global trade channel. The research investigated the effects of a blockage of the Strait of Hormuz on the global economy and food supply chains. Adopting a qualitative, exploratory research methodology with an interpretivist theoretical framework, the study used purposive sampling to identify 23 key informants from the fields of economics, geopolitics, supply chain management, policymaking and academia. Information was collected via semi-structured interviews and document analysis of reports from the International Energy Agency (IEA), World Bank, Food and Agriculture Organization (FAO) and International Monetary Fund (IMF). Thematic analysis was used to discern emerging themes regarding financial vulnerability, food security, geopolitical mechanisms and responses, and strategies for coping. The results showed that a temporary blockade would cause oil prices to spike between 35-80%, trigger inflationary pressures for countries importing energy resources, and negatively impact food security for countries dependent on Middle East transit routes. Reserve oil supplies can only buffer for 60-90 days, highlighting the need for contingency preparation. In conclusion, the study recommends a range of policies including improved energy diversification, diplomatic multilateralism and agricultural buffer stock programs. These insights are relevant for emerging markets, such as South Asia, Sub-Saharan Africa and Southeast Asia, as they are directly affected by Hormuz-driven commodity markets.