The escalating war in Iran has paralyzed tanker traffic through the Strait of Hormuz, and oil prices have fluctuated sharply. All this has brought to the fore the important role that the narrow sea corridor plays in global energy supplies, writes BTA, citing the AP.
The Strait of Hormuz is the narrow mouth of the Persian Gulf, through which about a fifth of the world's oil passes. Tankers sailing through the strait, which borders Iran to the north, transport gas and oil from across the Middle East to the rest of the world.
Any disruption to traffic through the Strait of Hormuz has a serious impact on the oil trade. On Monday, shipping disruptions caused a sharp rise in the price of black gold, but only briefly, as prices almost immediately started to fall after US President Donald Trump said the war may be coming to an end.
"The level of risk should not be exaggerated," said Hakan Kaya, a portfolio manager at investment management company "Neuberger Berman". According to him, companies could tolerate partial delays in deliveries of about a week - two. But a full or near-full shutdown lasting a month or more would push crude oil prices "into the quite serious triple digits," and natural gas prices for Europe "would match or exceed those of 2022."
The Strait of Hormuz is a curved waterway, about 20 miles (33 km) wide at its narrowest point. It connects the Persian Gulf with the Gulf of Oman. From there, ships continue to the rest of the world. Although some of the strait's waters fall within the territorial waters of Iran and Oman, it is considered an international maritime corridor through which all ships are free to pass. The United Arab Emirates, home to skyscraper-studded Dubai, also sits on the strait's shores.
Historically, the Strait of Hormuz has always been important for trade. Once it carried ceramics, ivory, silk and fabrics from China. More recently, it is a route for supertankers carrying oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the UAE and Iran. The vast majority of these cargoes are destined for Asia, including Tehran's only remaining customer, China.
Although there are pipelines from Saudi Arabia and the UAE that can bypass the strait, according to the US Energy Information Administration, "for most volumes that transit the strait, there is no other way out of the region".
The threats to this route are nothing new; they have existed in the past and then also led to higher energy prices. This was the case during the Israeli-Iranian war last June.
In the current escalation of tensions, Iran has attacked several ships in the Strait of Hormuz and threatened any vessel that tried to pass through it, effectively closing the strait to passage, but refrained from officially announcing that it was closing it.
Trump threatened on social media that the US would intensify its attacks on Iran if the Islamic Republic blocked the Strait of Hormuz. Tehran has been attacking energy infrastructure throughout the region, as well as traffic through the strait, which is a vital route for oil trade.
Iran also closed the strait in mid-February for what it said were military exercises. In previous flare-ups of tension and conflict in the region, Tehran has harassed shipping through the narrow straits. During the Iran-Iraq War of the 1980s, each side attempted to disrupt the other's oil sector by attacking tankers and other vessels, using mines that at times completely paralyzed traffic. In the years since, Iran has repeatedly threatened to close the strait to shipping.