The OECD estimates that around 90% of global trade is carried by sea and handled by ports. The Statista shows that the volume of global seaborne trade has increased significantly between 1990 and 2021, from 4 to 11 billion tons of goods loaded in ports worldwide.
Indeed, there are about 200 straits and channels in the world in total. Some of them are called chokepoints, namely, strategically important straits and channels to ensure the continuity and reliability of world maritime trade.
The Danish straits, a series of channels passing around Danish Islands that connect the Baltic Sea to the North Sea, is a good example.
The Danish straits refer to the Great Belt, which primarily facilitates transit of large-capacity vessels, the Little Belt, which’s, indeed, quite shallow and freezes at low temperatures in some areas, Øresund, a direct passage to the Baltic sea shared with Sweden, as well as Kattegat and Skagerrak area.
Instead of going around the Danish Islands via straits, small capacity vessels may pass through the Kiel Canal as a shorter route between the North Sea and the Baltic.
The Danish straits are vital to Europe's crude oil, petroleum liquids, and coal supply. These needs were previously largely covered by the supply of Russian crude oil and coal from terminals in the Baltic, mainly Baltic harbours in Ust-Luga and Primorsk. Thus far, the Danish Straits provided about 8% of the world's oil trade by sea.
However, European sanctions imposed on Russia have by no means reduced the role of the Danish Straits in the coal trade. The reality is that coal supply routes have been significantly lengthened whereas Russia has redirected its oil and coal exports to North Africa, China, and India.
What negative effect can we expect if the Danish Straits are blocked for political reasons? In the worst-case scenario, Russian oil tankers may be barred from the straits, for example, because of the Nordic governments’ concern about the reliability of Russian insurance companies that do not belong to the European IGP&I insurance group.
Anyway, during the World War I, Germany tried to block the passage of British coal to Scandinavia and Russia through the Danish Straits. During World War II, Denmark mined the straits to prevent German naval operations. Finally, during the Cold War, NATO considered the possibility of closing the Danish Straits for Soviet ships in case of a conflict with the Soviet Union.
So, what will happen? First, the heightening of military tension, given the importance of the Baltic both for NATO and Russia.
Secondly, there may be disruptions in fertilizer, grain and other agricultural commodities’ supply from the Baltic Sea ports to the rest of the world, since the Danish straits are an important export route for these commodities.
Global energy security will be put at risk. Final cessation of the Russian hydrocarbons and coal export along the Baltic sea route will definitely lead to a dramatic surge in energy prices in the world. Serious economic shocks await the Baltic countries, for which the only gateway to Europe will be a small area within the Lithuania–Poland border, as well as the Kiel Canal.
The editorial board of The Arctic Century