The world’s most important 21 miles

The world’s most important 21 miles

The Strait of Hormuz, a narrow channel connecting the Persian Gulf to the Gulf of Oman, carries a substantial share of the world’s traded energy—and that concentration makes it a critical chokepoint when conflict disrupts shipping. After the United States and Israel attacked Iran on Feb. 28, Iran retaliated with attacks that effectively closed the Strait of Hormuz, and oil prices spiked worldwide as the strait’s importance became clearer.

At its narrowest, the strait is roughly 21 miles (34 kilometers) wide. Ships must follow narrow lanes to navigate shallow water, increasing the risks of transiting the passage and reinforcing its chokehold role in moving energy from the Middle East to customers in Asia, Europe, North America and beyond. The AP reported that about a fifth of the world’s traded crude oil typically flows through the strait every day, along with a similar share of the world’s traded natural gas.

The channel supports exports from multiple Gulf producers, including Saudi Arabia, Iraq, the United Arab Emirates, Kuwait and Iran, according to the AP. Much of the oil that travels through the strait is sent to Asia, with China, India and Japan identified as major customers. Because oil prices are set internationally, disruptions in the region can push prices higher far beyond the producer countries—even where countries outside the immediate Middle East have their own oil supplies.

Since the start of the war, AP reported that ship traffic in the strait has fallen dramatically. The AP attributed much of the tanker decline to Iran targeting oil infrastructure in the Persian Gulf, including launching drones and missiles at ports and refineries responsible for producing oil. Some oil fields halted their output, which reduced the amount of oil available for export.

AP also reported that the threat of attack has been enough to raise insurance costs and dissuade other ships from attempting passage, even while Iran continues shipping its own oil through the strait. As of March 17, the AP said Iran had only targeted around 20 tankers directly, but it also described how Iran can strike infrastructure using missiles and cheap drones that may be difficult to counter.

The AP said pipelines in the region can sometimes bypass the Strait of Hormuz, but their capacity is limited. Even when oil gets past the strait via alternative routes, the AP noted that it may still remain exposed to attack—citing Iran striking Yanbu on Saudi Arabia’s Red Sea coast and the Emirati port of Fujairah just outside the strait.

Reduced exports can feed through to global pricing. The AP reported that a reduction in global supplies can mean higher prices everywhere—benefiting some producers such as Russia while worsening conditions for consumers. In the United States, the AP reported that the nationwide average price of gas was above $4 a gallon, up more than a dollar since the start of the war, and that a recent poll found 45% of Americans were “extremely” or “very” concerned about affording gas in the next few months.

Some strategic oil reserves have been released to ease market pressure, the AP said, but it characterized that as a stopgap response. The full impact, the AP reported, depends on how long the disruption lasts.