Middle East Unrest Heightens Tea Logistics Concerns for Transit via the Straits of Hormuz and Suez Canal
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Tea News for the week ending Oct. 27
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Middle East Unrest Heightens Tea Logistics Concerns
By Dan Bolton
Tea shipping and logistics executives closely monitor Middle East unrest as tea sales to the region declined.
Immediate concerns involve insurance premiums and pricing risk, but if Iran-backed Hezbollah escalates the Hamas conflict, Israel will likely retaliate against Iran. The Islamic Republic’s navy (IRGCN) has increasingly harassed international vessels, with 20 incidents in the past few years, including the seizing of tankers in the Strait of Hormuz (which spans Oman and Iran), a route traveled by 30% of the world’s oil and much of the world’s tea.
Due to the violent and volatile Hamas-Israeli conflict, sales of orthodox tea at India’s Kochi Auction declined to 70% of the 2 million kilos on offer. Though Israel buys negligible quantities, exports to other destinations through the Suez Canal will be hit, according to a report in the Hindu BusinessLine.
See: Middle East Conflict Threatens Global Growth (NYT)
Traders who spoke to the newspaper cautioned, “Shipments to destinations through the Suez Canal are likely to be hit on account of the war.”
They anticipate a further decline in demand and disruptions in tea procurement if the situation worsens.
Iran is the center of attention.
Normally a discerning trading partner with a preference for orthodox black tea, imports to Iran spiked last year, yet “At the moment, there are signs that Iran does not have enough teas to last through the winter season,” writes one trader.