How Malaysia Can Capitalise On The Eastward Shift In Maritime Trade

KUALA LUMPUR, July 1 (Bernama) -- The Middle East crisis is not ending; it is now just changing its shape. At present, what we are seeing is no longer a simple, temporary disruption, as analysts still expect, but a clear, structural reset across energy, freight, insurance, and logistics. Even if a fragile political arrangement lowers immediate tensions, Hormuz, the Red Sea, Bab el-Mandeb, and the East Med are going to be regarded and priced as risk-priced corridors for years, not weeks. Reuters already notes that the latest U.S.-Iran arrangement offers relief but, without any doubt, leaves core disputes unresolved, while the Strait of Hormuz flows are unlikely to return as quickly as some expect at present to pre-war levels. Taking the Red Sea example, the latter is still only at 60% of the level of shipping before Houthi actions, after a three-year “reopening”.

The key outcomes are clear. The first is partial de-escalation: prices soften, some tankers return, but what is much more important is that insurers, banks and charterers will continue to price political risk into every voyage. The second is renewed escalation: one missile, mine, boarding incident or Houthi miscalculation will be enough to push Red Sea and Gulf shipping again back into crisis, with most probably the same debilitating results. The third, and most likely, is managed instability, which means a situation not of full war, not of total peace, but of permanent friction for shipping, trade, and oil and gas markets, which is the most dangerous scenario because markets become numb while costs keep rising.