The Government must take immediate precautionary measures to ensure that the economy and the country’s smooth progress are maintained, in the event of a full-scale Gulf war, said CEO of the Shippers’ Academy Colombo, Rohan Masakorala.
Many say that the ongoing gulf crisis may create a huge negative impact to the supply chain and there may be a disruption similar to the ‘goods and services blockage’ that the world experienced during the Covid-19 pandemic, he said.
Masakorala said that it was very unfortunate that the violence in the gulf region as escalated as freight rates were coming down to manageable levels. “Now the freight rates will shoot up.”
Oil prices too would go up and if some oil wells are bombed there may be a scarcity of oil as well.
The price of oil has already jumped 5% after US President Joe Biden said the US was discussing possible strikes by Israel on Iran’s oil industry.
Iran is the seventh largest oil producer in the world, exporting around half its production abroad, mainly to China.
Since Iran’s missile attack on Israel on Monday, the price of benchmark Brent crude oil has risen 10% to $77 a barrel, although this remains below levels seen earlier this year.
Masakorale said that Sri Lanka should immediately start buying and collecting essential items such as crude oil, gas and other essentials sufficient for over six months.
Meanwhile Vice Chairman, Board of Airline Representatives Sri Lanka,Sudesh Rupasinghe said that if tensions between Israel and Iran escalate into a direct conflict, it would significantly impact airline operations and airports, particularly in the region.
“The potential effects could include measures like, Airspace Restrictions.”
“If this happens Airlines would likely avoid flying over Israeli or Iranian airspace, as well as neighboring regions that may be considered unsafe.”
Governments might also impose official airspace restrictions and airlines would adjust their routes accordingly, leading to longer flight times and increased fuel costs which would be passed on to the customers.” President of the Hotels Association, M. Shanthikumar said that so far there is no negative impact for the tourism industry as they don’t see any cancellations. “However, some tourists who are ‘transiting’ from the Gulf countries may have some issues if the airports restrict their flights.”
“It would be a good idea if the national carrier SriLankan Airlines looks at increasing their frequencies to European countries so as to avoid taking transit frights from Gulf airports.”
He said, “Tourists may also cancel their holidays to the Gulf region as well as Turkey and a marketing plan is needed to woo them to Sri Lanka.”
Meanwhile exporters say that higher freight rates may result in Sri Lanka losing its competitive edge for some goods.
