The conflict between Israel and Hamas, according to some of the worst scenarios, could lead to the eventual closure of the Suez Canal, which, if it happens, would lead to a new increase in the price of all kinds of goods, primarily oil and food. Already with the first days of the war between Israel and Hamas, world stock markets reacted, and the price of crude oil jumped by ten percent.
The Suez Canal is one of the most important sea routes and one of the most important links in the supply chain. 12 percent of world trade takes place through it. Every day, ships with cargo worth more than ten billion dollars pass through the Suez Canal. The possible closure of this channel could have unforeseeable consequences.
“If this channel and passage were to be closed, no one can predict in which direction sea transport would go and how expensive it would be to transport goods. The damage to the economy would be immeasurable,” says Vice President of the Chamber of Foreign Trade of BiH Ahmet Egrlić.
The first thing that would increase in price in the event of the closure of the Suez Canal would be energy products, and they would drag everything else down with them.
“Eventually the worst scenario can lead to a drastic increase in the prices of all energy products. Hope that doesn’t happen. But the danger is there. The danger is real. And you should be prepared for both worst options, and those options are for oil to go back to $100, and for gas to go over $500 or $700 per thousand cubic meters on the stock exchanges,” says Almir Bečarević, an energy expert.
In the short term, Bosnia and Herzegovina could benefit from the closure of the Suez Canal because imports from China would decrease. In the long term, however, things are different.
“The decline in exports from Bosnia and Herzegovina to the EU countries, and these are the most important markets for us. Then, in a somewhat longer period, the economy of Bosnia and Herzegovina would also be really affected if the Sucek Canal was really closed for a longer period. On the other hand, the one who would profit from this would be Russia”, says Marko Đogo, dean of the Faculty of Economics of the University of East Sarajevo.
Although we are not to blame this time, we are very likely to feel the consequences of the conflict in the Middle East.
“All these processes work according to the principle of connected vessels. They spill over from one market to another, so that at the moment we are suffering from certain problems of the big players that are indirectly transferred to our market”, says the president of the Banjaluka Regional Chamber of Commerce, Goran Račić.
When the Suez Canal was closed two years ago because of a stranded freighter, the consequences in the world economy were far-reaching. It took half a year to normalize the supply chains, and the damage was measured in tens of billions of dollars. And that’s only because the Suez Canal was closed for a few days.
