What is the Strait of Hormuz and why is it important?

The Strait of Hormuz is a vital waterway for the global economy. Here's what you need to know about the Strait of Hormuz .

 

 

What is the Strait of Hormuz?

Among the world's most important oil chokepoints, the Strait of Hormuz is of geostrategic importance to the United States and many others, as the strength of the global economy depends heavily on the flow of oil.

The strait lies between Oman and Iran and connects the Gulf in the north with the Gulf of Oman in the south and the Arabian Sea in the distance.

The strait is 33km wide at its narrowest point, with the shipping lane only 3km wide.

Why is the Strait of Hormuz important?

About a fifth of the world's total oil consumption passes through the Strait of Hormuz. According to data from analytics firm Vortexa, between 17.8 million and 20.8 million barrels of crude, condensate and fuels flow through the strait every day.

Members of the Organization of the Petroleum Exporting Countries (OPEC) – Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq – export the bulk of their crude through the Strait of Hormuz, mainly to Asia.

 

The US Fifth Fleet, based in Bahrain, is tasked with protecting commercial shipping in the region.

What happens if the Strait of Hormuz is closed?

Closing the sea has the advantage of being a means of imposing direct costs on Trump, as it would cause a surge in oil prices with almost immediate inflationary effects in the United States and globally.

But it would also be an act of severe economic self-harm. Iranian oil uses the same gateway, and closing the Strait of Hormuz risks drawing Gulf Arab states, which have been fierce critics of Israel's attack, into a war to defend their own interests.

In particular, closing the strait would be particularly damaging to China, which buys nearly 90% of Iran's oil exports, which are subject to international sanctions.