Why should we care about the Strait of Hormuz?
In this edition of TPO Explains, we break down the Strait of Hormuz, explaining why the narrow waterway is the world's most important oil chokepoint, why Iran has all but shut it down, and what that means for global markets.
Why should we care about the Strait of Hormuz?
What is the Strait of Hormuz?
We thought you’d never ask.
A strait is a narrow body of water that connects two larger bodies of water, typically used for shipping and navigation. The Strait of Hormuz connects the Persian Gulf to the Gulf of Oman. It’s only 21 nautical miles wide at its narrowest point, bordered on the north by Iran and on the south by the UAE and Oman (check it out).
Why does the U.S. care so much about it?
Before the Iran/U.S. conflict, over 20% of the world’s oil and liquified natural gas passed through that strait. That’s roughly $600B in energy trade every year; and anywhere from 80-130 ships trafficked the Strait daily…
So, it’s not dramatic to say Hormuz is the most important maritime chokepoint (think: a passageway with no good alternative route) in the world. Controlling that strait = leverage worth its weight in gold crude oil.
Iran knows that, and a key part of their military strategy has been to choke off traffic in the strait. Those upticking gas prices? It’s because oil trade through the strait has decreased to a trickle (supply goes down, demand and prices go up).
Why’s Iran taking control now?
This isn’t their first rodeo with the Strait.
They’ve claimed authority over it since 1979, and have been threatening to shut it down for just as long, but never fully made good on that promise… until March.
So, what’s the current state of the Strait?
Almost entirely shut down.
A ceasefire brokered in April briefly reopened the Strait, but negotiations keep getting hung up because the U.S. and Iran can’t agree on particulars of Iran’s nuclear program or the Strait’s future (the U.S. says it needs to be unrestricted and Iran wants toll booth privileges).
Until a deal is reached, the Strait will likely continue to operate at a fraction of its normal traffic.
A verse to consider whether you’re conducting high-level international diplomacy, stuck in the middle of a tense conflict at work, settling playground squabbles, or just trying to get your cat into his carrier… “Seek peace and pursue it. The eyes of the LORD are on the righteous, and his ears are open to their cry for help.”
Psalm 34:14–15 (CSB) (read full passage)