What is the Strait of Hormuz and why does it matter to global trade?

Daily Record

3 hours ago

The UK could be hit hard if Iran closes the Strait of Hormuz in response to American strikes on its nuclear sites
Fears of a widening conflict in the Middle East have deepened in recent days after the US bombed Iran. President Donald Trump made the unprecedented decision to bomb three Iranian nuclear sites over the weekend.
The UK was not involved in the air strikes but was informed beforehand. John Swinney has called for the conflict to end, while Keir Starmer said Iran's nuclear programme is a "grave threat" which US military action would "alleviate".
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The world is now bracing for Iran's response to the US joining Israel in the biggest western military action against the Islamic Republic since its 1979 revolution.
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One way Iran could hit back, according to analysts, is to close off the strait of Hormuz, a vital trade route, through which over a fifth of the world's oil supply, 20m barrels, and much of its liquified gas, passes each day.
Iran's parliament approved a measure to close the strait. Iran has threatened to close the strait in the past, which would restrict trade and impact global oil prices, but has never followed through. This time may be different, though.
What is the strait of Hormuz?
The strait of Hormuz lies between Oman and Iran and links the Gulf to the north with the Gulf of Oman to the south and the Arabian Sea beyond. It is 33km wide at its narrowest point, with the shipping lane just 3km wide.
The strait is one of the world's most important oil chokepoints and is crucial to the US and beyond, as the strength of the global economy is heavily dependent on the flow of oil.
Why is it so important?
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About one-fifth of the world's total oil consumption passes through the strait. Between the start of 2022 and last month, approximately 17.8 million to 20.8m barrels of crude, condensate, and fuels flowed through the strait daily, according to data from analytics firm Vortexa.
Members of the Organization of the Petroleum Exporting Countries (OPEC) – Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq – export most of their crude via the strait, mainly to Asia.
The US Fifth Fleet, based in Bahrain, is tasked with protecting commercial shipping in the area.
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What happens if it closes?
Closing the strait would trigger a global oil crisis, skyrocket inflation rates and potentially plunge the economy into a downturn. On Sunday, specialists cautioned that such a move to shut the strait might also elicit "a significant military response" from both the US and its allies.
Ami Daniel, CEO of maritime data company Windward, noted that even the mere "perception" of an Iranian assault on shipping could reduce maritime traffic to a mere trickle.
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Countless drivers could be hit with soaring fuel costs at the filling stations. The UK, which relies on imports for roughly half its oil supply, stands to be particularly exposed.
Iran has been warned that shutting down the strait would be tantamount to "economic suicide", as reported by The Telegraph.
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US Secretary of State Marco Rubio has called on Iran's allies, including China, to exert pressure on Tehran to keep the Strait of Hormuz open, stating that any closure would be a "terrible mistake".
Iranian oil also uses the same gateway, and shutting Hormuz risks bringing Gulf Arab states, who have been highly critical of the Israeli attack, into the war to safeguard their own interests, according to The Guardian.
China would be particularly affected. The world's second-largest economy buys almost 90 per cent of Iran's oil exports, which are subject to international sanctions.
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What is Iran saying about the strait?
Iranian lawmakers have voted to obstruct vital shipping routes through this key waterway after Trump decided to engage in the conflict between Israel and Iran.
Iran's Press TV reported at the weekend that the Iranian parliament approved a measure to close the strait of Hormuz However, the vote by the Iranian parliament is not definitive, and state television has emphasised that the ultimate decision lies with Iran's top security officials.
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On Sunday Iran's foreign minister, Seyed Abbas Araghchi, said that Trump's decision to bomb Iran " will have everlasting consequences".
Israel has made a "grave mistake" and "must be punished."
He did not, however, make any specific reference to the strait of Hormuz.
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