The Strait of Hormuz: What it is and why it matters to global trade
The Strait of Hormuz is one of the most important and strategic waterways in the world. It is a narrow passage of water located between the southern coast of Iran and the northern coast of Oman and the United Arab Emirates. This strait connects the Persian Gulf with the Gulf of Oman and the Arabian Sea, providing the only sea route for oil tankers and ships carrying natural gas from the oil-rich countries surrounding the Persian Gulf to the rest of the world.advertisementWith its strategic location and enormous volume of oil and gas that transits through it daily, the Strait of Hormuz affects global trade and energy security. Threats to block or close the strait can significantly restrict global oil supplies, raise energy prices, and hurt economies around the world.WHAT IS THE STRAIT OF HORMUZ?The Strait of Hormuz, situated geographically and strategically between Oman and Iran, connects the North Gulf with the Gulf of Oman and the Arabian Sea further south. The Strait, thanks to its geographical location, serves as the only sea passage from the Persian Gulf to the open ocean. It is for this reason that the Strait of Hormuz is considered to be one of the world's most strategically important "choke points".
The Strait is the primary export route for Gulf producers, including Saudi Arabia, the United Arab Emirates, Iraq, as well as Kuwait.advertisementIt is 33 kilometres wide at the narrowest point, while the shipping lane is only 3 km wide.ORIGIN OF THE NAMEThe link to the Persian Gulf was described as early as the first century, in the Peri-pus of the Erythraean Sea, but the description did not name the opening. During the 11th to 17th centuries AD, the eastern side of the Persian Gulf was occupied by the Kingdom of Ormus, and scholars think the strait may be based on the name of the kingdom."Ormus" is of Persian origin and derives from the word "Hur-mogh," which means "date palm." The Hurmoz and Minab tribes still call the strait "Hurmogh".WHY IS IT SO IMPORTANT?The Strait allows roughly 20 per cent of the world's daily oil consumption, which is around 20 million barrels, to pass through it. Between January 2022 and August 2023, about 17.8m to 20.8m barrels of crude, condensate and fuels were passing through the Strait each day, according to data from Vortexa, an analytics firm.Most of the members of the Organisation of the Petroleum Exporting Countries (OPEC) - Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq - ship most of their crude through the strait, most commonly to Asia.advertisementHowever, it has also been at the heart of regional tensions for years now and the problem seems to have escalated after the United States strike on three key nuclear facilities in Iran on June 21, which has put the spotlight back on the Strait of Hormuz. Iran has long threatened to choke the Strait and may act upon it if matters come to that.IMPACTS OF DISRUPTIONThe closure of the Strait is likely to trigger an oil price spike that would have an almost immediate inflationary impact in the US and in many countries globally, including India. However, experts say this course of action by Iran would lead to dramatic economic self-harm. Iranian oil uses the same choke point, and closing Hormuz risks drawing GCC Arab allies into the war to defend their interests.It is also said that the closure of the Strait would impact China significantly. The second-largest economy in the world purchases nearly 90% of Iranian oil-export revenues, which are secluded because most other countries do not agree to abide by sanctions imposed by the Chinese government.The Strait of Hormuz continues to be an important geopolitical and economic area, with implications for global oil markets. It will be critical over the coming years that international diplomacy continues for all stakeholders, as this will affect energy security and global economic well-being.For those who have studied West Asia and its global ramifications, any disruption in the Strait of Hormuz could affect consumer fuel prices and global economic recovery. For that reason, it is vital that stakeholders closely monitor developments as the Strait of Hormuz plays a significant role in international trade.Tune InMust Watch
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The Strait of Hormuz: What it is and why it matters to global trade
The Strait of Hormuz is one of the most important and strategic waterways in the world. It is a narrow passage of water located between the southern coast of Iran and the northern coast of Oman and the United Arab Emirates. This strait connects the Persian Gulf with the Gulf of Oman and the Arabian Sea, providing the only sea route for oil tankers and ships carrying natural gas from the oil-rich countries surrounding the Persian Gulf to the rest of the its strategic location and enormous volume of oil and gas that transits through it daily, the Strait of Hormuz affects global trade and energy security. Threats to block or close the strait can significantly restrict global oil supplies, raise energy prices, and hurt economies around the IS THE STRAIT OF HORMUZ?The Strait of Hormuz, situated geographically and strategically between Oman and Iran, connects the North Gulf with the Gulf of Oman and the Arabian Sea further south. The Strait, thanks to its geographical location, serves as the only sea passage from the Persian Gulf to the open ocean. It is for this reason that the Strait of Hormuz is considered to be one of the world's most strategically important "choke points". The Strait is the primary export route for Gulf producers, including Saudi Arabia, the United Arab Emirates, Iraq, as well as is 33 kilometres wide at the narrowest point, while the shipping lane is only 3 km OF THE NAMEThe link to the Persian Gulf was described as early as the first century, in the Peri-pus of the Erythraean Sea, but the description did not name the opening. During the 11th to 17th centuries AD, the eastern side of the Persian Gulf was occupied by the Kingdom of Ormus, and scholars think the strait may be based on the name of the kingdom."Ormus" is of Persian origin and derives from the word "Hur-mogh," which means "date palm." The Hurmoz and Minab tribes still call the strait "Hurmogh".WHY IS IT SO IMPORTANT?The Strait allows roughly 20 per cent of the world's daily oil consumption, which is around 20 million barrels, to pass through it. Between January 2022 and August 2023, about 17.8m to 20.8m barrels of crude, condensate and fuels were passing through the Strait each day, according to data from Vortexa, an analytics of the members of the Organisation of the Petroleum Exporting Countries (OPEC) - Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq - ship most of their crude through the strait, most commonly to it has also been at the heart of regional tensions for years now and the problem seems to have escalated after the United States strike on three key nuclear facilities in Iran on June 21, which has put the spotlight back on the Strait of Hormuz. Iran has long threatened to choke the Strait and may act upon it if matters come to OF DISRUPTIONThe closure of the Strait is likely to trigger an oil price spike that would have an almost immediate inflationary impact in the US and in many countries globally, including India. However, experts say this course of action by Iran would lead to dramatic economic self-harm. Iranian oil uses the same choke point, and closing Hormuz risks drawing GCC Arab allies into the war to defend their is also said that the closure of the Strait would impact China significantly. The second-largest economy in the world purchases nearly 90% of Iranian oil-export revenues, which are secluded because most other countries do not agree to abide by sanctions imposed by the Chinese Strait of Hormuz continues to be an important geopolitical and economic area, with implications for global oil markets. It will be critical over the coming years that international diplomacy continues for all stakeholders, as this will affect energy security and global economic those who have studied West Asia and its global ramifications, any disruption in the Strait of Hormuz could affect consumer fuel prices and global economic recovery. For that reason, it is vital that stakeholders closely monitor developments as the Strait of Hormuz plays a significant role in international InMust Watch
