If the Iran-Israel conflict worsens, what are the bets on the Strait of Hormuz?
In the Middle East, tensions are growing, and there is already a global impact of lockdowns, including higher gasoline prices for pumps.
Former Iranian Ehsan Khandouzi said tankers and liquefied natural gas cargo can only transition to the Strait of Hormuz under Iran’s permission, and the policy should start tomorrow, according to a report by Reuters on Wednesday. [Wednesday] One hundred days. ”
Experts say it is unclear whether Khandouzi speaks personally or his views are shared by the regime in Tehran, but the bets of any change through the Hormuz Strait will be important.
“This is the largest and most important maritime obstacle in the world in the global economy,” said Joe Calnan, vice president of energy and vice president of the Canadian Institute of Global Affairs.
“This is the single obstacle that is most likely to disrupt the international economy, and there are not many alternative routes.”
Speaking at the G7 summit in Alberta, leaders said in a joint statement that they are closely watching the conflict.
“We urge a resolution to resolve the Iranian crisis to lead to a wider reduction of hostilities in the Middle East, including a ceasefire in Gaza,” the statement said.
“We will maintain our impact on the international energy market and are ready to coordinate with like-minded partners to maintain market stability.”
What is the Strait of Hormuz?
The strait of Hormuz is about 30 kilometers in its narrowest position, serving as a passage between the Persian Gulf and the Gulf of Oman.
The Persian Gulf region shows the Strait of Hormuz, a crucial transport route, as well as narrow obstacles to Oman and the Arabian Gulf.
Although Oman technology controls waterways in the south, Iran’s immediate location in the north means that the ships may be at risk of attack or blockade.
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Among the numerous transport ships carrying a variety of commodities every day, most contain crude oil, liquefied natural gas, propane and many other energy products that are crucial to global economies.
According to the U.S. Energy Information Administration of the Department of Energy Statistics Bureau, in 2024, 20 million barrels of oil will pass through the strait every day, accounting for about 20% of global consumption.
“Even temporarily, oil cannot transit or even temporarily cause massive supply delays and increase transportation costs, potentially increasing world energy prices,” the U.S. Energy Information Administration said.
“Although most chokes can be circumvented by using other routes, which often greatly increase transit time, some chokes have no practical alternatives. Although there are some pipeline alternatives to avoid the use of the Hormuz’s straits, most transit straits have no other way to exit the area.”
Reuters, speaking at the Energy Asia Conference, quoted Takeshi Hashimoto, CEO of Japan’s second largest shipping company, and described the importance of the Strait.
“There is no other way to cargo in the (Persian) Gulf – no choice,” he said.
These tensions in the region stem from relatively new conflicts, including Israel’s struggle with Hamas in Gaza, where Iran had invited Hamas to arm Hamas with military resources and intelligence, while also supporting Hezbollah, Husses and other militant groups.
Iran also opposes a nuclear deal with the United States.
Recently, Israel launched a strike against Iran’s nuclear and military facilities, which led to Iran’s counterattack. Since then, the two sides have been on military strikes for nearly a week, eventually attracting more focused American watches.
If Iran is to target the Strait of Hormuz, it will escalate quickly.
“It’s a difficult choice for Iran because it almost certainly introduces the United States and others to the conflict,” Arif Lalani, senior geopolitical adviser at ArtistionCorp, said in an email to global news.
Lalani was formerly ambassador to Jordan, Iraq, Afghanistan and the United Arab Emirates, and is now Director-General for Strategic Policy for Global Affairs in Canada.
What happens if the Hormuz Strait is closed?
According to the U.S. Energy Information Administration, most oil from the Persian Gulf belongs to China, South Korea, Japan and India, and the U.S. Energy Information Administration also has less data.
But instability can affect the global oil market, not just individual countries.
According to the International Energy Agency, one in five of the world’s oil has experienced the Strait of Hormuz, and the shutdown will mean a significant increase in oil prices besides the recent rise.
In most cases, the same is true for transportation prices (including cars, airplanes, trains, ships, etc.) when oil prices rise.
“If we’re talking about taking five to 10 million barrels of oil from the market every day, that could have a huge impact globally, rather than just something restricted to the Middle East,” Carnan said.
“Energy is very dependent on transportation, used for heating, electricity, petrochemicals and various substances – oil is very important, and this is the main supply of it.”
Gasoline prices in Canada, as well as other countries, could rise dramatically if there are concerns about attacks from Iran or its agents. The oil consumed in Canada mainly comes from domestic sources, but also from international sources, including the Middle East.
In this case, the Hormuz Strait saw less, or no export cargo like oil not only detrimental to Canadians to fill gas boxes, but also had a larger ripple effect throughout the economy.
This could also mean Canadian oil exporters could lose their chances, as the closure of the Strait would mean higher international demand for oil.
“If Canada built pipelines and ports on our west coast, then Canada could provide key allies, and there would be fewer threats to undermine the Strait of Hormuz – Canada and the West would be stronger,” Lalani said.
“Instead, Canadian resources are radiating across the North American continent.”
Although experts believe that the Strait of Hormuz is unlikely to be used for leverage at this stage of the conflict, it is important to understand the risks, as Iran feels further pressure.
“They (Iran) will attack their customers’ energy security by closing the Hormuz Strait, rather than Israel or the United States. It’s more like an existential threat to the global economy, which Iran will try to use as leverage,” Karnan said.
“I still think it’s extremely unlikely that what they choose to do this, but it seems like the Iranian regime is likely to be in a situation where there is a real threat, which could create some very extreme options on the dining table.”
