Win or lose big? Hong Kong’s hub status a double-edged sword amid Middle East war

The conflict exposes the city to many risks, but some are seeing opportunities too. Read more at straitstimes.com.

HONG KONG – As war plays out in Iran, Hong Kong’s cherished role as a global hub for trade and wealth is cutting both ways.

The ongoing conflict in the Middle East has both laid bare the open economy’s vulnerabilities to market volatilities, and revealed its strengths as a haven to ride out the instability.

The Iran war leaves Hong Kong heavily exposed to risks on several fronts. The city – like many others around Asia, including Singapore – is at the mercy of a massive spike in global energy prices, as it imports nearly the entirety of its fuel needs.

Iran’s closure of the strategic Strait of Hormuz, through which a fifth of the world’s oil supply passes, has disrupted global shipments, driving the benchmark Brent crude beyond US$100.

With no clear end in sight to the conflict that began between the US-Israel alliance and Iran on Feb 28, prices are expected to remain high and volatile for a time.

In Hong Kong, the surging oil prices are already being passed on to consumers, pushing up prices across the city’s transport sector, which will in turn raise inflation.