From Hormuz to Malacca: the Next Chokepoint Risk

Scarborough Shoal illustrates how China is converting disputed claims into de facto control, and with Hormuz risk still elevated, even a nascent second chokepoint pressure compounds global market exposure.

The Strait of Hormuz remains the world's most critical oil chokepoint, with roughly 20% of global petroleum liquids transiting it daily — but it is no longer the only waterway repricing risk. US sanctions enforcement has tightened its grip on Iranian crude exports in recent weeks, with destroyers intercepting tankers attempting to leave Iranian waters, adding a fresh layer of physical disruption to a route already operating under elevated tension.

Chinese Coast Guard and militia fishing vessels surrounding the disputed Scarborough Shoal

Source: Kpler, MarineTraffic

Scarborough Shoal — known to the Philippines as Bajo de Masinloc and to China as Huangyan Dao — is a 150 km² coral atoll situated 220 km off the coast of Luzon, entirely within the Philippines' 200 nautical mile exclusive economic zone (EEZ). China has maintained de facto control of the feature since a tense standoff in 2012, when Chinese vessels blocked Philippine access to the lagoon and have not left since. A landmark 2016 ruling by the Permanent Court of Arbitration in The Hague found China's sweeping maritime claims in the South China Sea to be incompatible with the UN Convention on the Law of the Sea, and specifically ruled that Beijing's blockade of Scarborough Shoal violated international law by denying Filipino fishermen access to traditional fishing grounds. China has rejected and ignored the ruling entirely.

Tensions escalated sharply through 2024 and into 2025. Repeated water cannon deployments against Philippine coast guard and resupply vessels marked a new threshold of physical confrontation. In August 2025, a Philippine coast guard ship was damaged in a direct collision with a Chinese vessel near the shoal. The following month, China's State Council declared Scarborough Shoal a national nature reserve, designating a 3,523-hectare zone ostensibly for coral reef conservation. Manila condemned the move as "patently illegal" and a "clear pretext for occupation." The designation was widely interpreted as a "lawfare" mechanism — embedding Chinese sovereignty claims within a domestic legal framework that could then be used to justify coast guard enforcement against Philippine vessels. Critics also noted the environmental irony: a 2025 Center for Strategic and International Studies report found that China had destroyed up to 4,648 acres of reef since 2013. The latest development came on April 10–11, 2026, when Chinese authorities installed a 352-meter floating barrier across the shoal's entrance, with satellite imagery confirming the presence of four fishing boats, a naval or coast guard vessel, and ten CCG ships sighted in the area over the preceding week, per Reuters reporting.

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