What is the Strait of Hormuz and what could happen to oil prices if Iran
It’s called the world’s most critical oil choke point — and Iran holds the power.
Washington’s strikes on Iran stoked fears that Iran could retaliate by closing the Strait of Hormuz, a waterway between Iran and Oman through which around 20 per cent of the oil and gas consumed globally flows.
Oil prices tumbled Monday after Iran’s initial retaliation didn’t appear to involve the strait, but analysts have warned that closing the strategic maritime entryway to the Persian Gulf could disrupt the flow of oil and devastate the global economy, at least temporarily.
“It would be extremely dangerous,” Kaja Kallas, the EU high representative for foreign affairs and security policy, told reporters Monday.
If Tehran decides to disrupt or shut the strait, it would be “perilous,” said Burcu Ozcelik, a senior research fellow in Middle East security at the Royal United Services Institute in London, England.
“[It] could trigger global economic shock waves and runs counter to Iran’s own interests,” Ozcelik said in an online statement.
Iran appears outmatched when it comes to stopping Israel’s airstrikes, but it has another golden target at its disposal. CBC’s David Common breaks down how disruptions to strategic waterways could be used to devastate the world’s economy by disrupting the flow of oil.
Where is the Strait of Hormuz?
The Strait of Hormuz runs between Oman and Iran.
The strait connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. It’s only 33 kilometres wide at its narrowest point, but deep enough and wide enough to handle the world’s largest crude oil tankers.
The shipping lane is just three kilometres wide in either direction.
How much oil passes through the strait?
About one-fifth of the world’s total oil consumption passes through the strait, according to the U.S. Energy Information Administration (EIA). Most of that oil goes to Asia. In 2024, China, India, Japan, and South Korea were the top destinations for crude oil moving through the strait to Asia, notes the EIA.
“Large volumes of oil flow through the strait, and very few alternative options exist to move oil out of the strait if it is closed,” the EIA noted in an analysis last week.
Oil that passes through the strait comes from Saudi Arabia, the United Arab Emirates, Iraq, Iran, Kuwait and Bahrain, while major supplies of liquefied natural gas come from Qatar.
Last year, 20.2 million barrels of crude, condensate and fuels flowed through the strait daily, according to the EIA.
The EIA said that while most choke points can be circumvented by using other routes, which add significantly to transit times, some, like the Strait of Hormuz, have no practical alternatives.
“Most volumes that transit the strait have no alternative means of exiting the region,” the EIA wrote.
What could happen to oil prices?
As the EIA explains, the inability of oil to…
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