With airlines and shipping companies diverting or altogether cancelling trips in the Gulf, the Strait of Hormuz, Qatar's lifeline, is on edge.
Amid deteriorating security conditions in Iraq and neighbouring countries in the Middle East after Iranian general Qasem Soleimani's assassination last week, the Gulf nation of Qatar is in a precarious situation with its energy and logistical interests directly linked to the peace in the Strait of Hormuz, the only accessible sea channel for the tiny oil-rich country.
In 2019 alone, Qatar imported $32.69 billion worth of goods, maintaining a positive trade balance. In spite of considerable economic resilience in the face of a Gulf-led blockade against Qatar since 2017, the country nonetheless imports nearly 90 percent of its food.
With escalating US-Iran tensions, a number of major airlines have started avoiding flight paths over Iranian and Iraqi airspace. This comes after Iran fired multiple missiles targeting Iraqi military bases that were home to US-led coalition forces, in retaliation for the killing of Soleimani.
Although security experts argue that both the US and Iran are backing away from further military conflict, the region is still on edge. Saudi Arabia’s tanker and logistics group Bahri suspended transit through the Strait of Hormuz, which is bordered by Iran. It was also joined by Brazil’s Petrobras which stopped the transit of oil tankers through the straits. The British Royal Navy has also started escorting UK-flagged vessels transiting through.
Mounting cost and risk
Prior to the June 2017 blockade, Qatar’s food was imported through its only shared land border with Saudi Arabia. The blockade risked food shortages that were averted with deeper investments into food self-sufficiency, and deals with Iran and Turkey which fly and ship food products in.
Qatar was forced to reroute much of its trade, being effectively blocked off from its only land border with Saudi Arabia, and by sea through Dubai. Most ships to Qatar depart from Turkey, India and Oman.
Qatar Airways and Turkish Airlines are still operating their flights across Iraq, and have shown no sign of discontinuing flights. Most airlines continue to avoid flying over Syria as well, and at various points including the present, avoided parts of Iran, Iraq, and most of Yemen.
Qatar Airways, which already faces challenges from the blockade, would face further difficulties having to already fly longer routes to avoid Saudi Arabia and the UAE’s airspace, which increases fuel costs and lowers aircraft utilization while also being forced to discontinue some flights. An emergency scenario where they would be forced to fly food provisions into the beleaguered country while constrained by no-fly zones would add significant pressure to the blockaded country.
The additional mileage adds up, with airlines spending nearly $180 billion a year on jet fuel altogether.
Qatar Airways has nonetheless pushed onwards with fleet expansion into new markets in Africa and South America, while continuing to expand its fleet.
The country has shown resilience, as Qatar’s annual GDP growth recovered from 1.6 percent to 2.1 percent in 2018, projected to increase to 3.4 percent by 2021. The government also maintained a budget surplus for 2019.
But that’s not to say it hasn’t seen losses. It’s 2019 financial earnings report a $639 million loss, and a $1.3 billion increase in fuel expenses in 2019 compared to 2018.
While the situation remains tenable for the present, conflict in the region would effectively leave the small Gulf-state in a dire predicament.
If tensions or conflict sees an obstructed Straits of Hormuz, or if Qatar Airways is forced to avoid Iraq and Iran’s airspace, it could see a significant impact not only on the country’s ability to run flights efficiently, but on its very food security.
The Strait of Hormuz are recognized as a strategic chokepoint with daily oil flows averaging 21 million barrels per day, making up 21 percent of global petroleum liquids consumption.
For countries around the world, regional tensions pose worrying risks to global economies and energy markets which are vulnerable to instability and panic. Particularly, Gulf states are concerned that Iran may seal the Straits of Hormuz, having lobbied extensively with the US to isolate, encircle and confine Iranian influence in the region.
More critically, the Straits of Hormuz and the Arabian Gulf would likely be the scene of a military confrontation, given that the area is home to nearly 30,000 US soldiers, including the Navy’s 5th fleet in Bahrain, US Army Central in Kuwait, and several thousand personnel in Abu Dhabi.
In the case of open conflict, military planners largely expect Iran’s first move to be closing off the Straits of Hormuz.
At its narrowest point, the strait is only 33 kilometres wide.
Iranian military planners are aware of the risks and benefits to making the strategic strait impassable, investing significantly in mines, armed speedboats, rockets and submersibles as well as more than 1000 fast-attack craft that are focused on the strait.
This has allowed it to build over 70 ports along its coastline, with a resilient anti-access/area-denial network, designed to make the area inaccessible to any enemy.
While Qatar may not be immediate Iran’s target if conflict breaks out, it remains more than likely that it will be its victim.