The ever increasing importance of alternative energy corridors

The global economy is facing a wave of energy crises caused by geopolitical risks.

With the escalation of tension in the Middle East, the simultaneous riskization of the Strait of Hormuz and Bab-el-Mandeb, two of the most important routes of global energy supply, is changing the balance in the markets.

Because in the Strait of Hormuz, through which one-fifth of world oil trade and a quarter of LNG shipments pass, risk and the Houthis' threats to commercial ships at Bab-el-Mandeb, the southern gate of the Red Sea, have begun to increase.

Due to these threats, land-based bypass lines such as Saudi Arabia's East-West Pipeline connecting the Persian Gulf to the Yanbu Port on the Red Sea and the UAE's Habshan Pipeline extending to the Fujairah Port, which stand out as alternative routes, can carry less than one-third of the amount of crude oil passing through the Strait of Hormuz even when operated at full capacity.

It is clear that this amount is not guaranteed either.

On the other hand, there is no alternative route for the LNG supply of Qatar and the UAE.

Therefore, problems in Hormuz negatively affect a large portion of global LNG supply.

THE COST OF THE CRISIS IN THE STRAITS IS INCREASING

The risky picture created by Hormuz and Bab-el-Mandeb not only puts pressure on two main points of Middle Eastern maritime energy trade, namely global energy supply security, but also causes an almost double bottleneck in global trade.

Due to the unalternative nature of Hormuz and the mandatory route changes from Bab-el-Mandeb to the Cape of Good Hope, prolonged freight times, increased insurance costs, and sudden price spikes in spot markets become inevitable.

Therefore, the geopolitical risk premium in the markets remains permanently high.

On the other hand, the rise in Brent crude and the increase in LNG prices due to the geopolitical risk premium in energy prices stand out as a direct threat to economies.

THE VALUE OF NEW ENERGY ROUTES IS INCREASING

In this new era, where the Strait of Hormuz and Bab-el-Mandeb simultaneously enter the risk zone and strait passages face geopolitical risks, the importance of land-based energy corridors and safe ports increases even more.

Therefore, in this conjuncture where energy security has turned into a national security issue, countries that diversify their supply sources and position themselves on secure transit corridors will continue to play a determining role in global balances.

In this respect, land-based pipelines such as TANAP and BTC, Kirkuk-Ceyhan, and high-capacity storage and loading terminals like Ceyhan stand out as critical stability elements in regional and global energy supply security.

Now is the time to accelerate steps to become a safe harbor and trade center in energy.