EXPORTERS are closely watching rising tensions in the Middle East, warning that any disruption in the Strait of Hormuz — one of the world’s most critical oil transit routes — could drive fuel prices higher and add pressure on Philippine businesses and consumers.
“Cebu exporters are very worried because of the war,” said Fred Escalona, executive director of the Philippine Exporters Confederation Inc. (Philexport) Cebu Chapter. “What worries them is the rise in oil prices and its effects on the economy.”
Escalona said the narrow waterway plays a crucial role in global energy supply, carrying roughly one-fifth of the world’s oil shipments daily.
“The Strait of Hormuz is often described as the world’s most important energy chokepoint,” Escalona said. “For energy-importing economies like the Philippines, the stability of this passage is not a distant geopolitical concern — it is a direct economic necessity.”
The strait links the Persian Gulf to major global shipping routes, making it a vital corridor for crude oil and liquefied natural gas exports from the Middle East to the rest of the world.
Escalona said that while fears of military conflict in the area often dominate headlines, the more immediate risk to global trade could come from financial markets — particularly if maritime insurers suspend or sharply raise war-risk insurance coverage for vessels operating in the region.
“When geopolitical risks rise, maritime insurers often suspend or dramatically increase war-risk insurance coverage for ships operating in high-risk zones,” Escalona explained. “Without insurance, tanker operators cannot obtain bank financing, access international ports, or legally sail through contested waters.”
In such a scenario, the Strait could become commercially closed even if shipping lanes remain physically open, he added.
Any disruption to tanker movements could quickly push oil prices upward, fueling inflation across the global economy.
Escalona said higher fuel costs typically ripple through transportation, manufacturing and agriculture, eventually raising the prices of goods for consumers.
“For energy-importing countries such as the Philippines, the consequences could be particularly severe,” he said. “Rising fuel costs would translate into higher electricity prices, increased transportation expenses, and mounting pressure
on inflation.”
Higher energy costs could also slow economic growth as households and businesses struggle to absorb rising operating expenses, he added.
Escalona also noted that while Iran has occasionally threatened to close the Strait, the country itself relies heavily on the same route to export its oil.
“In reality, the Strait is less a weapon than a shared economic lifeline,” he said. “Closing it would not only harm energy-importing nations but would also deprive Iran of vital export income.”
Keep the passage open, stable
Because of this mutual dependence, Escalona said the international community should work to keep the passage open and stable.
“The Strait of Hormuz should be viewed not as a geopolitical battleground but as a neutral global energy corridor whose uninterrupted operation benefits both producers and consumers,” he said.
He added that governments and maritime powers could help maintain stability by coordinating naval patrols to secure shipping lanes and by providing temporary state-backed war-risk insurance guarantees if private insurers withdraw coverage.
At the same time, Escalona said countries like the Philippines should continue diversifying their energy sources and strengthening long-term resilience through renewable energy investments and strategic reserves.
“Even as diversification continues, the reality remains that the Strait of Hormuz will play a critical role in global energy flows for decades,” he said.
“The cost of disruption would not be borne by one nation alone but by the entire global economy.” / KOC