As the Iran-Israel conflict escalates, more and more reports are suggesting that Iran is mulling the closure of the Strait of Hormuz. Anvitii Rai explains why the passageway is important, the impact it has on global oil trade, and whether Iran could actually do what it claims to ponder
Why has the Strait of Hormuz been in the news?
As the Iran-Israel conflict escalates, attention on the Strait of Hormuz has also intensified. The tensions in the region are rooted in a combination of relatively recent conflicts — the Israel-Gaza war being the key one. Iran has been involved in the war by arming Hamas with military resources and intelligence and backing Hezbollah, Houthis (who created a blockade by attacking vessels in the Red Sea in 2023), and other militant groups. More recently, Israel launched strikes on Iran’s nuclear and military facilities, provoking Iran to retaliate. The two sides have been engaging in military strikes ever since, and have drawn the attention of the US. Global tensions spiked when it was revealed that two oil tankers collided in the region on Tuesday, although security concerns were ruled out by the United Arab Emirates’ (UAE) security forces. That said, the Strait of Hormuz has always been a bargaining chip for Iran in international negotiations, which is why it is under notice lately.
What will happen if the Strait of Hormuz is blocked?
The Strait of Hormuz is 33 km wide at its narrowest point, and has only two shipping lanes (each 3 km wide), one each for incoming and outgoing vessels. It is the only waterway which connects the Persian Gulf with the Gulf of Oman and the Arabian Sea, and 20% of the world’s oil supply passes through it. India is a key beneficiary from this arrangement, as it imports 90% of its crude oil, and 46% of this supply comes from Gulf countries. The fact that Brent North Sea crude rose 4.4% on Tuesday amid tensions between Israel and Iran show how significant peaceful conditions in the region are, and how they could impact the global economy. Experts say that if the Strait of Hormuz is affected, prices could raise to anywhere around $100-150 a barrel from the current $76.45 per barrel for Brent (after a $5 increase within the past week). The region’s liquified natural gas exports would also be under threat, as the strait accounts for 20% of the global exports.
The geopolitical status of the strait
The Strait of Hormuz is a critical narrow waterway between Iran and Oman. It is surrounded by eight Gulf nations — Oman, Kuwait, Qatar, the UAE, Saudi Arabia, Iraq, Bahrain, and Iran — and 90% of the oil exported by the region passes through it. It falls within the territorial waters of three nations — the UAE, Oman, and Iran. The US maintains a military presence in the region — its Fifth Fleet exercises operational control over maritime forces in the area around the strait and is headquartered in Manama, Bahrain. The US Coast Guard has also maintained a permanent presence since 2004 and conducts maritime patrols. Besides this, the Combined Task Force (CTF) 150, a multinational force whose jurisdiction includes the Strait of Hormuz, is also present. Pakistan, Canada, France, Germany, the UK, and the US all contribute to the approximately 15 vessels in CTF 150, with command rotating between the nations every four to six months.
Are there any alternatives?
Saudi Arabia and the UAE have constructed oil pipelines to bypass the chokepoint. These are Saudi Arabia’s East-West pipeline to the Red Sea and the UAE’s Abu Dhabi Crude Oil Pipeline to Fujairah, a port on the Gulf of Oman. However, their capacity is nowhere near the strait’s, which sees more than 20 million barrels pass through it everyday. The 1,200 km-long East-West Pipeline links oilfields in the Eastern Province to the port of Yanbu on the Red Sea, allowing Saudi Arabia to bypass the strait. It has a capacity of 5 million barrels per day (b/d), but only a tenth of it is estimated to be in use. Besides, it would add considerable shipping time to Asia and would still require tankers to navigate the southern Red Sea where Houthi militants are active. As for the Abu Dhabi pipeline, it has the capacity of 1.5 million b/d (with a surplus capacity of 500,00 b/d), is 400 km long, and carries Murban crude from the Habshan oilfields to Fujairah.
Can Iran really close the Strait of Hormuz?
Iran has threatened to shut down the Strait of Hormuz in times of heightened tensions in the past. Its ability to do so is bolstered through naval mines that can be seeded relatively quickly by a wide array of vessels, which Iran has been developing over the years, including midget submarines and small fast attack boats. Finding and clearing naval mines is tedious and has many risks, even in peaceful environments — and if they are deployed in times of conflict, operations to clear them could take a few weeks or even months. Iran could also attack foreign freight ships directly, and it has reportedly threatened to do so if nations support Israel in the military campaign against it. If Iran does shut down the passageway, a military response from the US and its allies in the Gulf is a possible consequence. However, Iran, as well as its allies (like China), also stand to lose significantly if the Strait of Hormuz is affected, as a majority of the oil supply to Southeast Asia passes through it.