Iran war shows urgency of Hong Kong’s green shipping transition

The war in Iran, culminating in the de facto closure of the Strait of Hormuz, has again exposed the world’s energy and maritime sector to acute vulnerabilities. The spike in oil prices and surging freight rates may grab headlines, but beneath these shocks lie fundamental questions about Asia’s – and Hong Kong’s – energy security, the resilience of shipping risk management and the urgent need to transform our maritime industry for a greener future.The Strait of Hormuz is not just a geopolitical hotspot – it’s the jugular vein of the world’s energy trade. Roughly one-fifth of global oil and liquefied natural gas (LPG) passes through its narrow waters. As conflict flared in Iran, leading shipping companies, including Maersk and Hapag-Lloyd, diverted vessels around the Cape of Good Hope, lengthening journey times and reducing global shipping capacity.The result: higher shipping and energy costs that hit businesses and consumers worldwide. Importantly, these shocks are not one-offs. Years of sanctions on Iranian and Russian fleets had trimmed global tanker capacity. With vessels stranded on both ends of the strait, market jitters quickly translate into price hikes.Asia’s giants are disproportionately exposed to oil transiting through the Strait of Hormuz: Japan gets 90 per cent of its crude from the region, South Korea about 70 per cent. By comparison, China’s energy security strategy – diversifying imports and expanding renewables – has reduced its direct reliance.According to the World Bank, imported energy covers just above 20 per cent of China’s consumption. That relative insulation has rippled through markets; stock indices in Japan and South Korea reacted with greater volatility than those in Hong Kong and mainland China.Hong Kong is a beneficiary of this mainland connection. The city’s 2024 Energy Statistics Report shows that over 80 per cent of its natural gas, LPG, aviation petrol and kerosene imports originate from mainland China. Still, about half of Hong Kong’s total energy import is destined for international bunkering. Any severe disruption – whether through maritime conflict or reassessments of shipping insurance – places our reputation as a global shipping hub at risk.04:04How US-Israeli strikes on Iran are sending shock waves through global energy marketsHow US-Israeli strikes on Iran are sending shock waves through global energy markets