The July agreement between Russia and Ukraine which was mediated by Turkey and the office of the U.N. Secretary General was intended to kick start a resumption of Ukrainian grain exports from the ports of Odesa, Chernomorsk and Pivdennyi which collectively accounted for about half of the country’s grain exports in the 2020-21 season. In this we must be hopeful for success, however there are several hurdles remaining.
Last month, President Biden signed into law the Ocean Shipping Reform Act of 2022 on the grounds of the need to reign in the international container shipping industry which is accused of contributing to U.S. inflation through increased freight rates. At the same time the sponsors are responding to lobbying by U.S. exporters who have been struggling to access container capacity at what they consider to be a reasonable price.
On May 27, Iran's paramilitary Revolutionary Guard launched helicopter raids in the Strait of Hormuz to detain two loaded Greek oil tankers, Delta Poseidon and Prudent Warrior. Greece accused the Iranian government of piracy and called for the immediate release of both vessels.
The economic crisis currently impacting Sri Lanka is sad to witness but has been brewing for some time. The port of Colombo, strategically positioned between the southern tip of India and the northern entrance to the Straits of Malacca was until recently a relatively stable trading hub, bustling with activity, for vessels trading back and forth between Europe and the Far East. Anyone who has visited will attest to the fact that Ceylon as it was previously known was about as close to a prosperous tropical paradise as you could get – anyone else remember swimming in the pool at the historic Mount Lavinia Hotel? Following the granting of a bloody independence to India in 1947, Ceylon followed in 1948 which in stark contrast was an entirely peaceful transition. Not until 1972 was the name Sri Lanka adopted as the country sought to shake off its colonial legacy.
The Russian invasion of Ukraine has resulted in a laser focus on policies that have resulted in Europe being heavily dependent on supplies of Russian oil and gas. Around 50% of Russia’s oil exports are destined for Europe according to recent International Energy Agency estimates which amounts to about 25% of the continent’s overall demand. This is equivalent to a VLCC from Russia each day.