What makes Strait of Hormuz a maritime flashpoint?

Political tensions between the US and Iran escalated to the point of near military confrontation as Tehran shot down a $110 million US drone in its airspace on June 20. The incident occurred days after Tehran was accused of attacking oil tankers en route Saudi Arabia and the UAE.

The escalation once again put the spotlight on the Strait of Hormuz, one of the world's most strategic shipping routes that connects major oil supplying Middle Eastern countries, including Iran and Saudi Arabia, to consumer countries in Europe, Asia and America. 

Both the US and Iran have maintained a heavy military presence in the Gulf since the US President Donald Trump abruptly withdrew from the landmark nuclear deal last year, reimposing harsh sanctions over Tehran. 

What does the strait do? 

About 18.5 million barrels of oil pass through the strait per day, which corresponds to almost a fifth of the world’s total oil exports, according to US Energy Information Administration. 

The Strait of Malacca, which is located in the Pacific Ocean between Malaysia and Indonesia lands, sees 16 million barrels transported, while Egypt’s Suez Channel manages 5.5 million barrels of oil according to estimates. 

The world’s daily oil consumption stands around 100 million barrels. 

The strait’s dimensions are wide and deep enough for the world’s largest tankers, which carry crude oil from Saudi Arabia, Iran, the UAE, Kuwait and Iraq. 

The Strait of Hormuz has also been used for almost all liquefied natural gas (LNG) exportation, handled by the Gulf state Qatar, which is the world’s biggest LNG producer. 

The crucial oil artery also plays a prominent role in Iran’s problematic economy, which has suffered US and Western sanctions for decades. The strait is vital for Iran, with oil making up two-thirds of all the country’s exports, which amounted to 66 billion dollars in 2017.

The strait’s politics and oil prices

As Washington increased its pressure on Tehran, backing its ally Saudi Arabia against the Shiite-majority Persian country, political tensions have escalated in the Strait of Hormuz, which is located between the two rival countries in the heart of the Gulf. 

If the Gulf’s oil shipping business cannot operate at its normal levels, then the first result will show up in spiking oil prices, which will have a major effect on the world’s finances and economic system. 

As a result, both businessmen and statesmen are closely watching what happens in the Strait of Hormuz to protect their interests and finances. 

After Trump threatened Tehran with more sanctions, which Iranian leaders felt was an outrageous and unnecessary punishment, they indicated that they could close down the strait to any shipping if necessary, letting the rest of the world share their punishment. 

“If one day [the US] tries to stop Iran’s oil exports, the no oil can be exported from the Persian Gulf,” said Iranian President Hassan Rouhani, during one of his public speeches. 

Iran also threatened to close down the strait in 2012. 

During the Iraq-Iran War, which lasted from 1980 to 1988, the world also witnessed a brutal Tanker War between the two states, in which 240 oil vessels were damaged as 55 of them were sunk in the Gulf. 

The US has stationed its 5th fleet in the Gulf, which is based in Bahrain, to protect its commercial and military interests. 

Experts think that any closure of the waterway could lead major disruptions in the world’s oil markets, creating “a cruel summer scenario for President Trump as he seeks to keep oil prices in check”. 

According to estimates, 70 percent of gasoline prices depend on the price of crude oil.