Strait of hormuz: The Strait of Hormuz is one of the world's most strategically important points, located between Oman and Iran. Approximately 170 kilometers long, it serves as the only shipping lane connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea, providing access to the Indian Ocean. Although its narrowest point is only 33 kilometers wide, the actual navigable space is far more restricted.
According to Thai News Agency, the significance of the Strait of Hormuz in global trade is immense, with more than a quarter of the world's offshore oil trade expected to pass through it by 2024 and early 2025. This accounts for almost a fifth of global oil and petroleum consumption. On average, around 20 million barrels of oil traverse this strait daily, with Saudi Arabia exporting nearly 40% of this oil. Additionally, the strait serves as a crucial transit route for about one-fifth of the world's liquefied natural gas (LNG), primarily originating from Qatar.
While countries like Saudi Arabia and the UAE are developing inland pipelines, such as Saudi Arabia's East-West pipeline and the UAE's Fujairah pipeline, these alternatives have limited capacity and cannot fully replace sea transport. Consequently, for large oil tankers, the Strait of Hormuz remains the most efficient route for exiting the Persian Gulf.
A disruption in the transportation through this strait would severely impact Asian countries like China, India, Japan, and South Korea, which heavily depend on energy imports via this route. In contrast, the United States would face less direct risk, as it imports only 7% of its total oil through the strait. However, any such disruption would cause global energy prices to spike. Analysts warn that interrupting this flow could push oil prices above $100 per barrel, a critical threshold that could destabilize the global economy. This was evident when tensions between Israel and Iran escalated, causing Brent crude futures to surge by 11% in a week.
The Asian region, particularly economic powerhouses such as China, India, Japan, and South Korea, is at significant risk if the Strait of Hormuz is closed. These countries heavily rely on this major shipping route, which facilitates the transport of 20 million barrels of crude oil and petroleum products per day, representing a significant portion of global consumption. Despite some countries having overland pipelines, their limited capacity cannot accommodate the vast volumes needed in Asia, making the strait the primary route for large oil tankers exiting the Persian Gulf. A closure would lead to significant delays and increased costs, potentially causing oil prices to soar, triggering economic instability in energy-dependent Asian economies.