Strait of Hormuz may be redundant in five years, says HSBC boss

The Strait of Hormuz could be rendered “redundant” within the next five years as the Iran war prompts countries to invest in alternative shipping routes to bypass the crucial waterway, the boss of HSBC has said. A fifth of the world’s oil and liquefied natural gas passed through the strait before the US-Israeli attack on Iran at the end of February. This led to Iran effectively blocking the waterway by targeting shipping, causing chaos in global energy markets.

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Top stories 1 16 of the best safaris in Africa Africa Georges Elhedery, HSBC’s chief executive, said these would allow the Middle East to weather the fallout from the conflict. “We do see this region being able to recover and then continue growing. It will mean a lot of investment,” he told the bank’s Future Forum in Dubai. “Of course, we do wish and hope to see a resolution to the conflict. But Hormuz , probably in five years’ time, may become redundant.”

Advertisement His comments came as Fatih Birol , chief executive of the International Energy Agency, issued renewed warnings over the precarious state of global energy markets in light of the continued disruption to shipping through the strait. Top stories 1 Prepare now for the inheritance tax mess coming for your pension Tax Birol sounded the alarm in particular over diesel markets , with prices already twice their pre-war levels because of the loss of supplies from the Middle East and Russia.

“On top of that, we are entering a season where the diesel demand typically goes up, and many refineries are planned for maintenance work,” he told the Financial Times Energy Transition Summit. “So we are on thin ice, and I am really worried about this.” He said it was “myopic” to only judge the depth of the crisis by the price of crude — which at $107 a barrel is lower than some had expected — rather than product prices. Business newsletter The business editor’s exclusive analysis of all the latest financial and economic news.

Sign up with one click You’ve successfully signed up to the Business newsletter Explore our newsletters An error occurred. Please use the link below. Business newsletter Explore our newsletters Birol dismissed ideas that the market would normalise next year. “I am very worried that there will be some overlapping crisis in the Middle East,” he said. “So we have now Iran, but there may be some other crisis, and it may further escalate the situation, which will have serious implications for the energy markets.

Advertisement “I personally don’t see any credible pathway that 2027 will be a year of normalisation.” Echoing Elhedery’s comments, Birol said that now the Strait of Hormuz had been closed once, even in the event of a ceasefire everyone would be aware of the risk it could be closed again. “There will be a huge response to that, starting from the Middle East countries themselves: how to bypass the Strait of Hormuz and what kind of other solutions are there?”

Birol noted that climate change had been “sliding down” international policy agendas, despite the increased intensity of extreme weather events. But he predicted that it would move back up the agenda as “energy security policy objectives and climate change objectives are so closely aligned”, because clean energy sources such as solar and batteries were cheap and quick to build.