Following through on an old threat, Iran has effectively closed the Strait of Hormuz, cutting off a vital waterway that normally carries about a fifth of global oil and liquefied natural gas supplies, in retaliation for U.S.-Israeli strikes.
As oil markets worry about a global energy crisis, the United States has said it may consider escorting vessels through the strait, which could prove very hard to secure – something Yemen’s Houthis proved in disrupting Red Sea shipping last year. (Editor’s note: This article was published by Reuters on Friday, March 13.)
About a fifth of global oil and liquefied natural gas normally passes through the strait, where traffic has dropped by 97% since the U.S.-Israeli war against Iran began on February 28, according to United Nations data.
WHY HAS IRAN CUT OFF THE STRAIT NOW?
When a commander in Iran’s Islamic Revolutionary Guard Corps warned in 2011 that cutting off the strait would be “easier than drinking a glass of water,” the threat to the strait had already been made many times before.
In the years since, the Guards have continued to warn they could close it, including during tensions over sanctions and Iran’s nuclear program in 2016 and 2018 and during Israeli and U.S. strikes in June last year.
Analysts have always regarded the closure of the strait as a measure of last resort because of the long-term strategic changes it might prompt among Iran’s enemies, and the potential for retaliation against its own energy sector.
The attack on Iran starting on February 28 with the killing of its supreme leader has changed that equation. Iranian officials describe the war as existential and with the Guards increasingly taking charge of strategy.
WHAT IS AT STAKE?
The narrow passage of water between Iran and Oman that links the Gulf with the Gulf of Oman is the only sea exit for oil- and gas-producing countries such as Kuwait, Iran, Iraq, Qatar and the United Arab Emirates.
Read more: Strait of Hormuz Shipping Is at Near-Total Halt, JMIC Says
Oil prices briefly climbed to their highest level since 2022 on Monday. High oil prices could trigger another cost-of-living crisis, as happened after Russia’s invasion of Ukraine in 2022, according to the United Nations.
A prolonged conflict could also cause a fertilizer shock, risking global food security. About 33% of the world’s fertilizers, including sulfur and ammonia, pass through the Strait, according to analytics firm Kpler.
An extended war could fuel fears of a global economic crisis similar to those that followed the Middle East oil shocks of the 1970s.