When you think of geopolitical risks to oil prices the first thought is the Strait of Hormuz and rising tension between the US and Iran. However the Straight of Malacca is the second major chokepoint risk in terms of volumes.
The Suez Canal and SUMED pipeline choke points affected oil prices during the Arab Spring when oil prices were over $100 and at a speculators zenith. The two routes account for around nine percent of the world’s daily seaborne oil.
Transportation of oil and gas from the Middle East can be disrupted if any of the routes are disrupted which can affect the price of crude oil in particular if they are choked off. The Strait of Hormuz is the major choke point.
The Strait of Bab el-Mandeb is a key route for oil and gas from the Middle East that can be disrupted and affect the price of crude oil if choked off. Saudi Arabia has temporarily halted all oil shipments through the waterway in the past.
Gulf State Bahrain announced on Wednesday it has made its biggest oil discovery in 86 years, an estimated 80 billion barrels of shale oil and estimated 13.7 trillion cubic feet of gas. The discovery was made Sunday off the islands west coast.