What Is The Strait Of Hormuz And why It Plays A Vital Role In Oil Trade?

The United States, along with Israel, had launched a massive operation on Iran on Saturday, eventually terming it “Operation fury” , with the main intention of destroying the Islamic Regime of Iran as well as to answer the supposed Nuclear Threats which were thrown by the Iranian Government, and the recent activity is said to have been reduced the nuclear threat.

The U.S. is also said to have been targeting their naval bases, destroying the nation’s ballistic armoury, and eliminating any proxy terror networks of Iran.

However, delving deep into this conflict, we can notice that this conflict in a way had taken its effect on a global level. One such instance is the closure of the Strait of Hormuz. And why is it an important factor to care about?

It is because every day, over 20 million barrels of crude oil and other petroleum products are transported through this route. So, that constitutes to over 20% of petroleum liquid consumption on a global scale.

And what is the Strait of Hormuz?

The Strait of Hormuz is a narrow sea passage channel where mostly shipping containers traverse, and it is located between Iran and Oman, which means it eventually connects the Gulf of Oman with the Persian Gulf and also towards the Arabian Sea. And due to this immense transportation of crude oil through this route, the Strait of Hormuz is considered one of the world’s most important oil transportation points. And also, even though it is narrow, it can accommodate large oil ships and at the same time, it is considered a point of blockage for ships because this strait does not have any other alternate ways.

But there have been several pipeline infrastructures built by the UAE and also Saudi Arabia, which can cross over the Strait of Hormuz easily, which may somewhat minimise the impact of disturbances caused by the conflict.

Last month, the Iranian officials had also warned that they might close the Strait of Hormuz if the USA or any other country launched a strike against Iran.

As of now An Iranian Islamic Revolutionary Guard Corps (IRGC) in a radio broadcast apparently declared that ‘no ship is allowed to pass the Strait of Hormuz’, escalating concerns among the oil markets.

Even though it is a small channel, it is actually impossible to close it physically. And along with the U.S Naval presence over the region, it would be difficult for Iran to achieve this. But that doesn’t mean it does not affect the flow of the traffic.

Because when shipping companies sense danger, they also indicate that their ships should stay away. Even now, many maritime shipping transport organisations like CMA CGM and Hapag Lloyd have instructed their ships to take shelter and suspended all transit activities through the strait. Which may severely impact the global oil prices in the market.

This article is written by Nag Adithya , a student of Loyola Academy interning with Deccan chronicle.