As fighting between Israel and Iran is boiling over, the most strategic oil chokepoint in the world – the Strait of Hormuz – is in the spotlight.
Concerns have been raised about just how disruptive the war could be for the steady flow of Gulf oil shipments to Europe, the US and Asia.
Adam Lakhani, security director at International SOS, warned that shutting it could cause a bigger market turmoil than the Russian invasion of Ukraine and Covid-19.
He told Metro that the price of oil could jump from the current $71.77 to as much as $120 per barrel in a ‘worst-case scenario’.
‘Iran has a very well-established naval base in the city of Bandar Abbas and it has a strong naval capability,’ Lakhani explained.
‘So whether they decide to pull that lever… is something we are concerned about and are watching very closely.’
About a fifth of the world’s oil is transited through the shipping lane, which splits Iran on one side and Oman and the UAE on the other, and links the Persian Gulf to the Gulf of Oman and the Arabian Sea in the Indian Ocean.
Tankers collecting from various ports on the Persian Gulf must go through Hormuz.
The strait – between 35 to 60 miles wide – has been at the heart of regional tensions for decades, but the threat from Iran to shut it has only escalated the fears.
Islamic Revolutionary Guard commander Sardar Esmail Kowsari told local media that closing Hormuz ‘is under consideration, and Iran will make the best decision with determination.’
He said: ‘Our hands are wide open when it comes to punishing the enemy, and the military response was only part of our overall response.’
As a major chokepoint, the operation of Hormuz is critical to global energy security.
The inability of any oil to transit – even temporarily – can create substantial supply delays and raise shipping costs, increasing world energy prices.
Although most chokepoints can be bypassed by using other routes, which often add significantly to transit time, some have no alternatives.
Lakhani stressed that Kowsari’s threat ‘should be taken seriously’, judging by the US repositioning of the USS Nimitz aircraft carrier along with several support tankers to bolster the military in the region.
Iran’s threat to shut Homruz comes as a vessel crashed into two ships sailing nearby, 22 nautical miles east of Khor Fakkan in the UAE.
The Emirati national guard said it evacuated 24 people from an oil tanker after the collision.
The crude oil tanker, ADALYNN, was bound for Egypt’s Suez Canal when the crash in the Gulf of Oman happened.
British maritime security firm Ambrey has said the cause of the incident is ‘not security-related’.
Naval sources cited by Reuters warned that electronic interference with commercial ship navigation systems has surged in recent days around the strait and the wider Gulf, which is having an impact on vessels.
Maritime ship experts say shipowners are increasingly wary of using the waterway, with some ships having tightened security and others canceling routes there.
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