The Daily View: In the national interest

VENEZUELAN oil may be back on the mainstream market for the first time in years, but it comes with a long and restrictive list of terms and conditions.

This is a US controlled affair, so China, Russia, Iran, Cuba and North Korea-linked entities are inevitably not on the guest list, and the determination of who can and can’t get involved will require a (US) lawyer to work through the detail for you.

The destination is also largely determined by political geography.

While China was previously happy to buy Venezuelan crude at a discount of $15 per barrel before the US blockade, the discounts being marketed by Vitol and Trafigura are closer to $5-$8 per barrel.

Canada, Iran and Russia are cheaper, but ultimately it was concerns over US control that saw state-owned PetroChina explicitly order its traders not to buy Venezuelan crude.

That national security determines the course of the most geopolitically charged trade on the planet is of course inevitable, but shipping is increasingly having to navigate its way through, or align itself with, national interests that clash.

Security is reshaping risk appetites for investment from Beijing to Balboa.

Today China’s foreign ministry is considering its response to Panama’s move to kick Hong Kong’s CK Hutchison out of its canal ports. But it knows similar fights are brewing in the EU and elsewhere tomorrow.

The era of globalisation where supply chain executives were focused almost exclusively on increased efficiency, comparative advantage and cost reduction are over. They now must contend with a host of other factors, particularly risk and resilience. But national security now overrides almost any other consideration.

For shipping that means affiliations, beneficial ownership and country of registration matters.

Commercial decisions are now a fluid assessment of risk appetite based on how you see the geopolitical, regulatory and security dynamics ahead.

In the new world order, commercial logistics have become strategic corridors.

Flag-based compliance is now overridden by behaviour-based enforcement.

Insurance risk assumptions are overlayed with geopolitical risk models.

Efficiency gives way to resilience.

Maritime routes, chokepoints, ports and undersea infrastructure serve as strategic factors that directly influence security and stability.

And as a result, routine maritime activity is increasingly evaluated not just for compliance or safety, but for what it reveals about exposure, resilience and strategic risk.

Because these questions are no longer the preserve of the policymakers and politicians; they touch each and every business that depends on global supply.

The deals have become more politically conditioned and the decisions more politically contingent, so it naturally follows that shipping’s executive class has to become more politically savvy to navigate the new world order.

Richard Meade
Editor-in-chief, Lloyd’s List

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