Strait of Hormuz Tensions Threaten Global Internet and India's Aluminium Supply
Iran war: Why Strait of Hormuz tensions threaten cables powering India’s internet, aluminium supply
The Indian Express
Image: The Indian Express
The ongoing conflict between Iran and the US and Israel has raised concerns about the Strait of Hormuz, a crucial route for submarine cables that support global internet infrastructure. Damage to these cables could lead to internet outages and disruptions in India's aluminium supply, impacting various sectors including automotive.
- 01The Strait of Hormuz is a critical chokepoint for global internet cables, carrying 99% of internet traffic.
- 02Military operations increase the risk of accidental damage to submarine cables.
- 03India's aluminium industry faces a supply shock due to disrupted trade flows from the Middle East.
- 04Production cuts of 20-40% are reported in India's aluminium sector, with scrap prices rising nearly 30%.
- 05The automotive sector in India may see increased costs due to rising aluminium prices.
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The ongoing conflict involving Iran, the US, and Israel has heightened tensions around the Strait of Hormuz, a vital route for submarine cables that facilitate approximately 99% of global internet traffic. Iran has warned that these cables are vulnerable, raising fears of potential outages that could disrupt telecommunications and financial transactions. Key cable systems like Asia-Africa-Europe 1 (AAE-1) and the FALCON network are essential for data flows between Asia, the Gulf, and Europe. Experts indicate that while cables have not yet been directly damaged, military operations could increase the risk of accidental damage, complicating repair efforts due to security concerns and logistical challenges. Furthermore, the conflict is impacting India's aluminium sector, which relies heavily on imported scrap. Disruptions have led to production cuts of 20-40% and a 30% increase in scrap prices, creating inventory shortages. This situation is expected to affect the automotive industry, which consumes a significant portion of aluminium, leading to increased costs for manufacturers and ultimately consumers.
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The disruptions in aluminium supply could lead to higher costs for consumers in India, particularly affecting the automotive sector where aluminium is a key input.
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