The Strait of Hormuz is the world’s busiest oil shipping channel that connects the Gulf with the Arabian Sea. It matters considerably in the world markets, trades, politics, businesses and economies.
The Strait of Hormuz is among the world’s most
important oil chokepoints. It is geo-strategically important to the United
States and beyond, as the strength of the global economy is heavily dependent
on the flow of oil. So, the functioning Strait of Hormuz is “absolutely
essential” to the health of the global economy.
Undoubtedly, the geographic leverage over global
shipping gives Iran the “capacity to cause a shock in oil markets, drive up oil
prices, drive inflation and to collapsing their enemies’ economic agenda using
the Strait of Hormuz as an arm in the region.
Geographically, the Strait of Hormuz lies between Oman
and Iran, linking the sea passage from the countries on Gulf countries- Iraq,
Kuwait, Saudi Arabia, Bahrain, Qatar and the United Arab Emirates.
It is 33km wide at its narrowest point, with the
shipping lane just 3km wide, requiring vessels to pass through both Iranian and
Omani territorial waters.
OPEC countries- Saudi Arabia, Iran, the United Arab
Emirates, Kuwait and Iraq – export most of their crude via the strait, mainly
to Asia. According to the US Energy Information Administration (EIA), about 20%
of global oil and gas flows through this narrow shipping lane in the Gulf per
day.
Blocking it would have profound consequences for the
global economy, disrupting international trade and ratcheting up oil prices.
Closing the strait also means a near-immediate inflationary effect in the US
and across the globe.
It could also inflate the cost of goods and services
worldwide and hit some of the world’s biggest economies, including China, India
and Japan, which are among the top importers of crude oil passing through the
strait.
Now when Iran gets threats from any superpower such as
the USA or other EU nations, one way Iran could retaliate is to close off the
strait of Hormuz. Iran has done this several times in the past. Iran’s acts for
blocking the Strait of Hormuz examine how world politics and the economy
impact one another through this vital trade route. Iran uses the Strait of
Hormuz as the safeguard of their own interests.
For this reason, the United Arab Emirates
and Saudi Arabia have proposed building more oil pipelines to avoid the
problematic waterway.
So, Iran’s blocking politics and policies with the
Strait of Hormuz has been an important subject in the discourse of political
economy in the world.
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