President Hassan Rouhani signals Tehran could disrupt shipments, prompting a warning from US military. We are speaking about the Strait of Hormuz! 19% of the World’s oil transports from this place and it’s important for Oil Price and the future of Oil Industry.
Bank of America Experts predicts that if the Strait of Hormuz is blocked, oil prices will rise to $120. Russia today: Get ready for $250 oil if Iran blocks key shipment route in Middle East, analysts tell RT.
How many oil barrels cross the Strait of Hormuz on a daily basis?
The Strait of Hormuz is a strategic waterway which connects major oil producers in the Middle East to major oil markets in Asia-Pacific, Europe, North America, and other regions. On a daily basis one-third of the world’s oil is transported through this strait. In the year 2016, 18.5 million barrels of oil were transported through this Strait, which is 9% higher than in 2015, this information was provided by the US Energy Information Administration or (IEA). The aforementioned amount is equivalent to 30 percent of the total crude oil and other transit fluids that were moved through sea transportation.
Crude oil and transit condensate from the Strait of Hormuz in 2017 would be estimated at 17.2 million barrels per day and in the first half of 2018 it would be at 17.4 million barrels a day, these estimations were carried out by the analytics firm called Vortexa.
More about Strait of Hormuz:
Most of the oil produced in countries such as Saudi Arabia, Iran, the United Arab Emirates, Kuwait, and Iraq is sent to the world markets through this strait. It is also the only gateway to export almost all of Qatar’s LNG resources.
Strait of Hormuz is a sea passage which is only 30 miles wide at its narrowest point, but through this strait, over 90 percent of oil exports from the Persian Gulf pass through on a daily basis. Any effort resulting in the blockage of this passage has grave consequences, for example, if a tanker explodes or a terrorist attack happens, or even a military presence is enough to get the energy prices skyrocketing, therefore putting the global economy at risk. Some of these might temporarily interrupt the flows, while others, like the last one, a military presence, might have longer-term consequences.
The purpose of this site is to provide you with information regarding the threat to oil flows that go through the Strait, a background on the political, economic, business, technical, and military issues involved in the process of potential disruptions. An attack on Persian Gulf shipping would incite a reaction from the oil producers themselves, insurance companies, and even regional/global military forces.
The nature of the perspectives offered here is historical and to some extent technical and it should help the readers in attaining careful, reasoned, and responsible views about the danger of world’s dependence on the Strait of Hormuz.
Important events of recent years:
The seizure of MV Maersk Tigris in 2015
According to a spokesman for the U.S. Defense Department, On April 28th, 2015, IRGCN patrol boats issued a warning to the container ship Maersk Tigris a Marshall Islands-flagged ship which was westbound through the strait, they directed the ship into Iranian territorial waters. When the ship’s master declined the order, one of the Iranian crafts fired shots across the bridge of Maersk Tigris. The master complied eventually and proceeded into waters near Larak Island. USS Farragut was deployed by the navy to monitor the ordeal. Maersk has agreed to pay an Iranian company $163,000 over a dispute about 10 container boxes which were transported to Dubai in 2005. Furthermore, a fine of $3.6 million was ordered by the court.
The threats in 2018
In July 2018, Iran threatened to close the strait. This decision was made a month after the U.S withdrawal from the JCPOA deal earlier in the year. Reportedly, Iran’s Revolutionary Guard is ready to carry out the instructions if the need arises.