Why the Strait of Hormuz matters – and what a blockade could mean for Asia, the world
Iran's parliament has approved a measure to close the Strait of Hormuz after the United States
launched military strikes on its nuclear facilities over the weekend. The final decision rests with the country's Supreme National Security Council and Supreme Leader Ayatollah Ali Khamenei – but the move has already deepened fears for the global energy trade.
Advertisement
In this explainer, we examine why this matters and what the implications of a blockade would be.
Where is the Strait of Hormuz? Why is it so critical?
The Strait of Hormuz is a narrow, 33-kilometre chokepoint between the Persian Gulf and the Gulf of Oman that handles roughly 20 per cent of global oil and gas flows, according to data from the US Energy Information Administration.
In 2024, an estimated 84 per cent of the crude oil and condensate and 83 per cent of the liquefied natural gas that moved through the Strait of Hormuz went to Asian markets.
China, India, Japan and South Korea were the top destinations in Asia, accounting for a combined 69 per cent of all crude oil and condensate flows passing through the strategic waterway.
Advertisement
These markets would likely be most affected by any disruptions to supply.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
South China Morning Post
2 hours ago
- South China Morning Post
Bitcoin drops below US$100,000 after US strikes Iran nuclear sites
Bitcoin slid below US$100,000 for the first time since May and Ether sank sharply after President Donald Trump said US bombers attacked Iran's three main nuclear sites, triggering risk aversion in weekend trading in digital-asset markets. Advertisement Bitcoin sank as much as 3.8 per cent to US$98,904 as of 12.05pm in New York in the aftermath of the attacks. Ether, the second-largest token, fell as much as 10 per cent to about US$2,157, its lowest intraday level since May 8. 'Markets are nervously eyeing ongoing geopolitical developments,' said Caroline Mauron, co-founder of Orbit Markets, a provider of liquidity for crypto derivatives. The focus of markets will be largely on oil when traditional markets reopen, she said. The latest losses come after Trump said the Iranian sites of Fordow, Natanz, and Isfahan were struck in the operation, specifically describing a 'payload of BOMBS' dropped on Fordow, a key location of uranium enrichment that has raised international concern that Iran was preparing to create a nuclear weapon. 'The overhang of whether the US would strike Iran caused a sell-off through the week and into the weekend,' said Cosmo Jiang, general partner at Pantera Capital Management. Advertisement Total liquidation of crypto bets over the last 24 hours was more than US$1 billion, with about US$915 million and US$109 million in long and short positions closed respectively, according to data compiled by Coinglass.
South China Morning Post
2 hours ago
- South China Morning Post
Why the Strait of Hormuz matters – and what a blockade could mean for China, the world
Iran's parliament has approved a measure to close the Strait of Hormuz after the United States launched military strikes on its nuclear facilities over the weekend. The final decision rests with the country's Supreme National Security Council and Supreme Leader Ayatollah Ali Khamenei – but the move has already deepened fears for the global energy trade. Advertisement In this explainer, we examine why this matters and what the implications of a blockade would be. Where is the Strait of Hormuz? Why is it so critical? The Strait of Hormuz is a narrow, 33-kilometre chokepoint between the Persian Gulf and the Gulf of Oman that handles roughly 20 per cent of global oil and gas flows, according to data from the US Energy Information Administration. In 2024, an estimated 84 per cent of the crude oil and condensate and 83 per cent of the liquefied natural gas that moved through the Strait of Hormuz went to Asian markets. China, India, Japan and South Korea were the top destinations in Asia, accounting for a combined 69 per cent of all crude oil and condensate flows passing through the strategic waterway. Advertisement These markets would likely be most affected by any disruptions to supply.
South China Morning Post
2 hours ago
- South China Morning Post
Asian shippers fear spiralling costs as Iran threatens Strait of Hormuz closure
US air strikes on Iran sent oil prices soaring on Monday, leaving Asian shippers burdened with fresh costs on top of extra insurance premiums of US$1 million more per tanker, as Tehran threatened to close the Strait of Hormuz and paralyse the crucial sea lane. Up to 20 million barrels of oil pass each day through Hormuz, one-fifth of global supply, most of it destined for East Asia's biggest economies – China, South Korea and Japan. The neck of water is controlled by Iran, whose parliament on Sunday approved the closure of the shipping lane in response to the US joining Israel 's bombardment of the country. Any closure of Hormuz will have global ramifications for the Gulf oil-producing nations and the export markets of Asia. Oil spiked to close to US$80 on Monday morning from US$60 a barrel at the beginning of June. Any prolonged rise is likely to soon be felt by Asian consumers.
