Chokepoint

A chokepoint is a narrow shipping route, such as a strait or canal, through which a large share of a commodity's seaborne trade must pass.

Some shipping routes cannot be avoided without a long and costly detour, and when a large share of a commodity’s seaborne trade funnels through one narrow strait or canal, that passage becomes a chokepoint. The Strait of Hormuz, through which a large share of the world’s seaborne crude oil and LNG passes, is the most closely watched example, alongside the Strait of Malacca and the Suez Canal.

A chokepoint concentrates risk: a blockage, whether from an accident, a political dispute, or an attack on shipping, can strand cargo that has few alternative routes, pushing up freight rates and, if the disruption is severe enough, the underlying commodity price itself. Markets price in some ongoing risk premium for the most exposed chokepoints even without an active disruption, because rerouting around them is often far longer and more expensive.