The main outcome of the military conflict between the United States, Israel and Iran has been the mutual blockade of the Strait of Hormuz. Ship transit through it has dropped by 95%, while oil and gas prices in Europe and Asia have risen by 35 to 60%. The crisis has made it abundantly clear how the closure of a single maritime route can shake the entire global trading system.
Against this backdrop, world attention has shifted to another strategic chokepoint — the Strait of Malacca, stretching between Malaysia and Indonesia. Last week, Indonesian Finance Minister Purbaya Yudhi Sadewa, citing the Iranian precedent, publicly mused: should ships not be charged a toll for passage? He quickly walked back his words, but the idea had already rattled markets and triggered diplomatic reactions.
Why Is the Strait of Malacca So Important?
The Strait of Malacca is the shortest maritime route between East Asia and the Middle East and Europe. It runs between Malaysia and Indonesia, with Thailand bordering it to the north and Singapore to the south. Nearly 22% of global maritime trade passes through this strait.
The range of cargo is exceptionally broad: oil and liquefied natural gas, coal, palm oil, iron ore. The US Energy Information Administration identifies the Straits of Malacca and Hormuz as the world’s principal oil transit chokepoints. Notably, in recent years more oil has passed through the Strait of Malacca than through the Strait of Hormuz.
What Makes the Strait Vulnerable?
The strait stretches 800 kilometres, but at its narrowest point is just 2.7 kilometres wide. By comparison, the Strait of Hormuz at its narrowest is 34 kilometres, twelve times wider. This sharply increases the risk of collisions and groundings, particularly in the busiest sections.
Even localised disruptions to traffic can slow the passage of vessels and significantly increase the cost of shipping. Alternative routes through the Indonesian archipelago exist in theory, but they are far less convenient and require considerably more complex navigation.
Who Controls the Strait?
The Strait of Malacca borders the territorial waters of Malaysia, Indonesia, Thailand and Singapore. All four states patrol it jointly. Under international law, however, the strait is classified as an international waterway: coastal states have no right to halt transit or charge passage fees.
This is precisely why the Indonesian finance minister’s remarks had such an impact, even though he retracted them almost immediately. Singapore and Malaysia swiftly stated that the question of tolls was not being seriously considered. Nevertheless, the mere fact that such an idea was voiced aloud exposed an anxiety that had long been simmering in the region.
China’s “Malacca Dilemma”
No country watches the fate of the Strait of Malacca more closely than China. The world’s largest oil importer, it is critically dependent on supplies that travel precisely this route. Any blockade, whether caused by war, accident, piracy or a political crisis, threatens China with a severe energy shortage and a collapse of its trade flows.
Chinese leaders recognised this vulnerability long ago and gave it a name: the “Malacca dilemma.” The response has taken the form of a diversification policy: building oil and gas pipelines from Myanmar and Russia, investing in alternative routes under the Belt and Road Initiative, and building up strategic reserves. Even so, China has yet to free itself from its dependence on the Strait of Malacca and is unlikely to do so in the foreseeable future.
