Background and Significance of the Strait of Hormuz
The Strait of Hormuz, one of the world’s most vital trade routes, may become a major flashpoint in the Middle East conflict following Iran’s parliament recommendation to close it in response to US bombing of three Iranian nuclear facilities.
The US strikes, which joined Israel’s offensive against Iran starting June 13, have prompted Tehran to consider this extreme measure. Although no official decision has been made yet, the strait’s potential closure could have significant global implications due to its crucial role in international trade, especially oil and gas exports from the Middle East.
Strategic Importance and Potential Impact
Located between Iran and Oman, the strait connects the Gulf of Oman to the Persian Gulf and facilitates approximately 20% of the world’s oil trade. Any disruption in this area could lead to a surge in oil prices and trigger a ripple effect across the global economy.
Countries like China, India, South Korea, and Japan, major importers of Iranian oil and other Gulf nations’ oil, would be significantly affected by such a closure. Saudi Arabia, the leading oil exporter through this route, and Iran, another significant exporter with China as its primary buyer, could face increased production costs and potential inflation worldwide.
Call for Closure
Following the US bombing of Fordo, Natanz, and Isfahan facilities, Iran’s parliament approved a resolution recommending the closure of the Strait of Hormuz. The chairman of the parliamentary committee on National Security and Foreign Policy, Esmaeil Kousari, stated that the parliament concluded the strait should be closed, though the final decision lies with the Supreme Security Council.
Iran’s Past Threats and Current Considerations
Iran has previously threatened to close the strait but never followed through. The current gravity of the situation and the unprovoked military offensives by Israel and the US might push Tehran to seriously consider this unconventional response. During the Iran-Iraq war (1980-1988), both nations targeted oil tankers, prompting the US to deploy military escorts for these vessels.
Iran weighs the potential benefits and drawbacks of closing the strait, considering its economic impact on Iran and its allies like China, as well as the risk of military retaliation from the US or other regional countries safeguarding their interests.
US and EU Warnings
Marco Rubio, the US Secretary of State, urged China to advise Iran against closing the strait, emphasizing China’s reliance on this passage for oil exports. Rubio warned that such a move would be “another terrible mistake” by Iran, causing significant economic harm to others rather than the US.
China’s Foreign Ministry spokesperson, Guo Jiakun, acknowledged the strait’s importance for international trade routes and emphasized global interest in maintaining stability. The EU’s High Representative for Foreign Policy, Kaja Kallas, described a closure as “extremely dangerous” and unbeneficial to anyone, stressing the need for a long-term diplomatic solution.
Market Reaction
The Brent crude oil benchmark, Europe’s reference, reached a 5.7% increase to $81.40 per barrel on the news, its highest since January. However, it moderated to $78.26 per barrel before European markets opened, reflecting a 1.62% rise from the previous close.
Key Questions and Answers
- What is the Strait of Hormuz? The Strait of Hormuz is a narrow waterway between Iran and Oman that connects the Gulf of Oman to the Persian Gulf, serving as a crucial trade route for global oil shipments.
- Why is the Strait of Hormuz significant? It facilitates around 20% of the world’s oil trade, making it vital for international energy security and global economic stability.
- What are the potential consequences of closing the Strait of Hormuz? Closing the strait could lead to a surge in oil prices, triggering a ripple effect across the global economy and disproportionately affecting countries heavily reliant on oil imports from the region, such as China, India, South Korea, and Japan.
- What have the US and EU said about the situation? The US has warned Iran against closing the strait, emphasizing the severe economic consequences. The EU has also expressed concern, calling for a long-term diplomatic solution to prevent escalation.
