Recent tensions between Iran and the US are threatening the safety of the world’s ships and movement oil in the Strait of Hormuz.
The narrow strait is the most important chokepoint for the world’s oil supply. Some 21 million barrels — or $1.2 billion worth of oil — pass through the strait every day.
One way Iran could exact its revenge on the US and its allies is by shutting or harassing tankers in the strait, which would disrupt oil supply and send prices shooting up.
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Tensions between the West and Iran bubbled to a historic height in recent days after the assassination of top Iranian military commander Qassem Soleimani and Tehran bombed two Iraqi bases that housed US troops.
They have sparked fears of wider US-Iran attacks in the greater region, which could take place in and around the Strait of Hormuz, a narrow body of water linking the Persian Gulf to the Gulf of Oman, which feeds into Arabian Sea and the rest of the world.
While Iran’s leaders claim to have “concluded” their revenge for Soleimani’s death — and President Donald Trump appears to believe them — many regional experts and diplomatic sources say Iran could unleash other modes of attack, which include unleashing allied militias to disrupt the Middle East.
One strategy could include Iran closing the Strait of Hormuz, which would stop oil tanker traffic, disrupt global oil supply, and send prices shooting up.
Here’s what you need to know about this valuable strait.
Why is the Strait of Hormuz important?
Though the strait is tiny — at its narrowest point it is just 33 km (21 miles) across — it’s a geopolitically and financially crucial chokepoint.
It’s the world’s busiest shipping lane, chiefly because there are limited alternatives to bypass the strait. Most of the oil that passes through the strait come from Saudi Arabia, the US Energy Information Administration (EIA) reported.
Some 21 million barrels of crude and refined oil pass through the strait every day, the EIA said, citing 2018 statistics.
That’s about one-third of the world’s sea-traded oil, or $1.2 billion worth of oil a day, at current oil prices.
How important is the strait to the US and its allies?
The US and many of its allies have billion-dollar reasons to protect the Strait of Hormuz.
The majority of Saudi Arabia’s crude exports pass through the Strait of Hormuz, meaning much of the oil-dependent economy’s wealth is situated there. Saudi state-backed oil tanker Bahri temporarily suspended its shipments through the strait after Iran’s missile strikes in Iran, the Financial Times reported.
The UK Royal Navy has also sent vessels to escort British ships to protect them from potential attacks amid the heightened tensions, the Press Association reported.
It has good reason to worry: last July, Iran’s Revolutionary Guards seized two British oil tankers sailing in the strait’s international waters and, according to the UK, attempted to harass another British tanker.
Last June Iran shot down a US drone
Source:: Business Insider