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Home Energy Usage Energy Procurement

Could India Blockade the Strait of Malacca?

by Team Energy Asia
July 10, 2020
in Energy Procurement, Energy Usage, Oil & Gas
Could India Blockade the Strait of Malacca?

A satellite image of the Strait of Malacca as it passes Singapore

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Tensions with China could see India choke a key oil supply route

The world’s oil supply is used to naval threats. Iran threatens to block the Strait of Hormuz every now and then, while piracy is a danger to ships plying the Red Sea route close to Somalia.

Lately, another threat has emerged, as covered by H I Sutton in Forbes. India may use its naval fleet to blockade the Strait of Malacca, cutting off vital supplies of crude to China.

This strategic chokepoint connects the Indian Ocean to the Pacific, and is the shortest shipping route from the Middle East to Far East crude buyers. The vast majority of China’s oil supply passes through the Strait of Malacca – from the Persian Gulf, Venezuela, and Africa to the mega ports on China’s eastern seaboard.

A Strategic Location

To get an idea of the strait’s importance, in 2015, almost a third of the 61 percent of total global petroleum on maritime routes transited the Strait of Malacca, the second-largest oil trade chokepoint in the world after the Strait of Hormuz. That works out to more than 16 million barrels per day (bpd).

Chinese oil imports are helping to prop up the world oil market that’s been battered by COVID-19. In May, China imported a record 11.34 billion bpd of oil, partly driven by China’s economic reopening, and also partly due to record low crude prices.

India, with its location close to the mouth of the strait, will therefore look to set up a blockade to prevent oil from flowing through to China. With bases at the Andaman and Nicobar Islands, India could theoretically park several destroyers and frigates (as well as their new aircraft carrier, INS Vikramaditya) to close the strait off to commercial traffic.

The recent tensions between China and India have already spilled over to other areas of trade. Chinese imports are being held up at Indian ports for no reason, according to CNN. The Indian government also banned more than 60 Chinese mobile apps, including Tiktok and WeChat in late June.

Bypassing the Strait

But China may already have plans to bypass the Strait of Malacca. As part of the Belt and Road initiative, China is building a new port in Gwadar, Pakistan. Goods (and oil) can be unloaded there to be put on a train to Kashgar in western China as part of the China Pakistan Economic Corridor (CPEC).

Another route around the Strait of Malacca is the Northern Sea Route, up around Russia north of the Arctic Circle, down to China via the Bering Strait. As polar ice melts, the route may become commercially viable in the summer months. Together with Russia, China may assert its strength in the Arctic Circle. In a 2018 policy paper, China says it, “hopes to work with all parties to build a ‘Polar Silk Road’ through developing the Arctic shipping routes”.

No Blockade in Sight

For now, any blockade of the Strait of Malacca is an unlikely possibility, even for naval planners. An Indian blockade of the Strait of Malacca will also disrupt shipments to US allies South Korea and Japan. As can be seen by repeat Iranian attempts to block the Strait of Hormuz, the US takes a very dim view of such actions. Meanwhile, disruption of Malacca trade will also see India’s economy take an unsustainable blow, given the current COVID-19 situation.

While India does have the theoretical capability to set up a blockade of the Strait of Malacca, it won’t likely try that unless for a last resort. The strategic impact of the Strait of Malacca will continue to play a role in Chinese trade and policy planning, but the Belt and Road project will seek to lessen its importance.

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