TRADE AND IMPORTS UNSCATHED - SUPPLIES TO CYPRUS NORMAL, DESPITE CRISIS IN THE STRAIT OF HORMUZ - Filenews 4/3 by Charalambos Zakos
The situation in the Strait of Hormuz remains tense, against the backdrop of Iran's threats and increased vigilance in international shipping, however, according to competent sources, Cyprus does not seem to be directly affected by the developments.
Despite the fact that some ships, including some under the Cypriot flag, are reportedly trapped in the wider area, the commercial and energy dependence of the Republic of Cyprus on this maritime corridor is considered limited to non-existent.
Oil and liquefied natural gas pass through the Strait of Hormuz, heading mainly to Asian markets, without being a main trade artery for the Cypriot economy, either in terms of importing products or supplying energy.
"We are closely monitoring the situation," Alexandros Iosifides, director general of the Cyprus Shipping Chamber, told "F", pointing out that Cyprus' commercial dependence on this corridor is either zero or minimal.
As he mentioned, no impact on the supply chain to and from Cyprus has been recorded so far, with the relevant commercial activities continuing normally, regardless of developments in the Persian Gulf.
Mr. Iosifidis appeared reassuring as to the impact on Cypriot trade, clarifying that, although there may be ships or seafarers managing companies with a presence in Cyprus and which are located in the Straits area, no Iranian attack has been recorded so far either against these ships or against the specific crews.
Asked whether the complete closure of the Straits is feasible and whether Tehran has such a right, the secretary general of the Cyprus Chamber of Shipping noted that Iran does not have the ability to block the passage because it does not belong to it. However, he recalled that Tehran has threatened attacks on ships attempting to pass through the site. As a result, several shipping companies have instructed their ships to temporarily suspend crossings and head to "safe waters" until the situation is cleared.
Big problem for China
According to what he said, the country that is expected to be most affected by any prolonged disruption in the Strait of Hormuz is China, which obtains a significant part of its energy resources from the Gulf countries.
A disruption of the flow of oil and gas to the Asian market could have a broader impact on international energy prices, with knock-on effects on the global economy. This is also a reason that may force China to get involved in order to restore the passage through the Straits.
At this stage, however, the competent bodies in Cyprus are monitoring the developments, assuring that there is no immediate reason for concern for the smooth supply of Cyprus or for the operation of the country's shipping activity.
19 vessels under the Cypriot flag
At the same time, the Deputy Ministry of Shipping is monitoring the alarming ramifications of the conflagration in the Middle East. So according to the authorities, there are currently 19 ships under the Cypriot flag in the Persian Gulf, underlining that both the ships and the seafarers working on them are safe.
It should be noted that most of them are active on a permanent basis in the area, mainly providing specialized or auxiliary shipping services.
The Deputy Ministry of Shipping emphasizes that it has been closely monitoring the situation and developments from the first moment and is in communication with the management companies of the Cypriot-flagged ships located in the area.
It should be clarified that ships flying the Cypriot flag and registered in the Republic of Cyprus are one thing and ships managed by companies based in Cyprus, which may fly the flag of any other state, are another, so these numbers, i.e. the 19 ships, refer only to those under the Cypriot flag.
94% increase in reference fare
The effects of the disruption in the Persian Gulf are not limited to energy alone. Insurance companies have cancelled coverage for "war risk" for ships operating in the region, which dramatically increases shipping costs and prevents many companies from transporting oil or gas from the Persian Gulf, while at the same time the basic reference fare, i.e. the cost of chartering a ship for a specific route and type of cargo, for tankers used to transport 2 million barrels of oil from the Middle East to China, rose to a record high of $423.736 per day on Monday, according to LSEG data. A development that corresponds to an increase of more than 94% compared to Friday's close.
