By Neal Lineback and Mandy Lineback Gritzner, Geography in the NewsTM
Egypt’s stability and security remain uncertain. Amid calls by opposition supporters for the president’s removal in early 2011, the country erupted into widespread demonstrations against the government and President Hosni Mubarak was removed. General elections brought Muslim Brotherhood candidate Mohamed Morsi into power, he subsequently was overthrown by the military.
These actions sparked speculation about Egypt’s strategic geographic position in the region. Widespread unrest could jeopardize security of the Suez Canal, which is an important world oil chokepoint.
While incredibly important and providing passage for a large portion of the oil that arrives in the North America and Europe from the Middle East, the Suez Canal is but one narrow strait (called “chokepoints”) through which oil passes on its way to oil-dependent countries. According to an article by Business Insider, seven oil chokepoints of the world are crucial to the world economy. These chokepoints moved about half of the world’s oil production of 84 million barrels per day (bbl/d) in 2010.
So far, the Suez Canal has remained open through the recent unrest. Egyptian troops reinforced the guards who protect the Suez Canal and the Suez-Mediterranean pipeline (called the “SUMED”) that runs alongside it. When fully loaded large tankers cannot navigate the canal, their oil is diverted to the SUMED, which transfers it to empty tankers waiting off the north coast of Egypt.
In the worst-case scenario, the events in Egypt perhaps could have triggered disruption of both the Suez Canal and the SUMED. Several different scenarios might have occurred, placing the canal and pipeline in jeopardy. The Suez and SUMED are a critical source of Egypt’s income, second only to its tourism revenues.
The world will closely watch any future actions that might occur in Egypt. Labor strikes temporarily could shut down operations at the Suez Canal or the SUMED. Prior to Mubarak’s resignation, 6,000 workers staged a sit-in at the Suez Canal, but the protest did not disrupt operations.
As one historical example of disruption of the Suez, Egypt closed the canal from 1967 to 1975 in response to the Arab-Israeli War, also called the Six-Day War fought between Israel and Egypt, Jordan and Syria. During that time, oil tankers sailed around the Cape of Good Hope at the southern tip of the African continent to reach the West.
In 2009, 16 percent of the cargo through the Suez Canal was petroleum (both crude oil and refined products). That amounted to an estimated one million barrels per day (bbl/d).
According to Eri Nikolai Stavseth, an analyst at Arctic Securities in Oslo, Norway, disruption of the SUMED would have a greater impact today on world oil markets than a closure of the Suez Canal itself.
If a real disruption at the Suez Canal and the SUMED pipeline occurred, sufficient surplus oil is available to meet world demand. Egypt produces no oil, so the only issue with the Suez Canal and the pipeline is that the geography of oil transport would change.
According to the Business Insider article, approximately one-third of all oil moved by tanker in 2010 navigated the Strait of Hormuz chokepoint. Following it in order of importance based on amount of oil transported through the chokepoints are: the Strait of Malacca, the Suez Canal, Bab el-Mandab, Bosporus, the Panama Canal and the Danish Straits.
The world’s energy market depends on stability in its products’ transportation. Blockage of any chokepoint, particularly in the region around the Persian Gulf and Red Sea, would interrupt the world’s oil transport pattern. Such threats, real or imagined, would affect world energy prices.
And that is Geography in the NewsTM.
Sources: Revised from GITN 1082 Suez Chokepoint, Feb. 25, 2011; http://www.businessinsider.com/oil-chokepoints-suez-canal-2011-1#1-the-strait-of-hormuz-1; and http://www.businessweek.com/magazine/content/11_07/b4215016314977.htm
Co-authors of Geography in the News (GITN) are Neal Lineback, Appalachian State University Professor Emeritus of Geography, and Geographer Mandy Lineback Gritzner. University News Director Jane Nicholson serves as technical editor. Geography in the NewsLLC is solely owned and operated by Neal Lineback for the purpose of providing geographic education to readers worldwide.