The Strait of Hormuz, a strategic waterway in the Middle East, is making the news headlines, but for all the wrong reasons. This critical, relatively hazard-free, maritime chokepoint links the Persian Gulf, to the west, with the Gulf of Oman and Arabian Sea, to the southeast. The Persian Gulf’s only access to the open ocean is sandwiched between southwestern Iran, to the north, and the Musandam Governorate of Oman, which shares the Musandam Peninsula with the United Arab Emirates (UAE), to the south. The Iranian-controlled islands of Hengam, Hormuz, Lark, and Qeshm lie along the northern coastline. The Strait is roughly 100 miles long, but only 21 miles wide at its narrowest point. According to the US Energy Information Authority, it is deep-enough and wide- enough to accommodate the world’s largest crude oil tankers. The depth of the waterway is greatest near the Musandam Peninsula.
Two 2-mile-wide navigable shipping lanes, one inbound and the other outbound, are separated by a 2-mile-wide buffer zone. These shipping lines lie mostly within Iranian territorial waters. At its narrowest point, the Strait of Hormuz comes under both Iranian and Omani control. The Persian Gulf is lined with critical civilian infrastructure, consisting of seaports, oil refineries and seawater desalination plants. The Strait has been the scene of several previous confrontations between Iran and the US.
Bulk carriers, chemical tankers, container ships, crude oil tankers, and gas tankers convey crude oil, liquefied natural gas (LNG), and refined oil products (diesel, petroleum, jet fuel) from ports in Iran, Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates. Under normal circumstances, an average of 20 million barrels of crude oil and oil products, amounting to one-fifth of global oil supplies, pass through the Strait each day. Around 80% is exported to Asian markets, including China (which purchases almost 80% of Iranian oil), India, Japan, South Korea, and Southeast Asian countries such as Thailand. Around 25% of the world’s supply of LNG also passes through the waterway. Qatar and the UAE account for 20% of global LNG exports. Saudi Arabia and the UAE have alternative routes for export of oil and gas, through the Fujairah export terminal in the Gulf of Oman. As much as 30% of global fertiliser exports also pass through the Strait of Hormuz. Some of the world’s largest ammonia and urea plants, which convert natural gas into nitrogenous fertilisers, are to be found in the Gulf region.
Iran’s naval defences in the Strait comprise sea mines, fast attack vessels, submarines, drones and short-range missile systems. There have been 12 reported attacks on vessels in the Persian Gulf, Strait of Hormuz, and Gulf of Oman since the outbreak of war on 28 February. On 2 March, the Islamic Revolutionary Guard Corps (IRGC) warned they would set fire to any vessels attempting to pass through the Strait of Hormuz. In a statement two days later, the IRGC claimed it had “complete control” of the shipping route. According to the UK Maritime Trade Operations (UKMTO) Centre, an oil tanker was hit near Kuwait on the morning of 5 March. High and rising insurance premiums and cargo rates have caused shipping companies to halt all operations.
Iranian disruption of maritime traffic along the Strait inevitably invited repercussions. Trump thus posted on Truth Social on 3 March: “No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD,” followed by: “The United States’ ECONOMIC and MILITARY MIGHT is the GREATEST ON EARTH – More actions to come.” On the same day, Trump announced a plan to insure and escort tankers through the Strait of Hormuz, funded by the US Development Finance Corporation. Fox News host Brian Kilmeade, appearing on ‘Fox & Friends’ on 9 March, conveyed Trump’s message to commercial oil tankers to “show some guts” and resume sailing through the Strait, now that the Iranian navy had been destroyed.
The oil crises of October 1973 and 1979 have been replicated in the latest global economic shock, which has caused a spike in oil and gas prices across the world. Crude oil prices surpassed $100 for a barrel of international benchmark Brent Crude on 8 March- the highest price since the conflict in Ukraine began in March 2022, only to fall after President Trump claimed that the war was now “complete.” Volatility in oil prices has been accompanied by corresponding movements in stock markets, with billions wiped off stock prices, especially in Asian markets.
Despite the large fossil fuel reserves in the Arabian Peninsula, exports of oil and LNG are especially vulnerable to blockades at two critical geographic chokepoints-the Strait of Hormuz, and the Bab al-Mandeb Strait, which connects the Arabian Sea to the Red Sea. The Suez Canal, made by humans, is an additional source of vulnerability. The Strait of Hormuz episode has demonstrated the world’s continued dependence on oil and LNG and susceptibility to acute shortages in the face of a naval blockade. The resilience of target nations is being tested, but the rest of the world is not immune to the consequences of a major slowdown in maritime trade. Opportunistic stockpiling and augmentation of strategic and commercial oil and gas reserves to build up storage capacity, as well as active consideration of alternative fossil fuel producers may help cushion the impact of the current, as well as future, oil shocks. Even better, current events should provide a renewed impetus to invest in renewable energy sources. Whatever the eventual outcome of the present conflict, the after-effects of the blockade of the Strait of Hormuz are expected to last for several weeks, if not months.
Ashis Banerjee
Amazing facts many unknown and of great interest.