What are the economic consequences for the world if Iran blocks the transit of oil and gas?, 22 OCT

 What are the economic consequences for the world if Iran blocks the transit of oil and gas?

Baghdad Today - Follow-up

The war between Israel and the Islamist group Hamas has raised the risk of a wider conflict in the region in which Iran and other factions in the region could be embroidered.

Analysts and market watchers say the conflict could prompt the United States to tighten sanctions on Iran, prompting Tehran to take retaliatory measures against ships in the Strait of Hormuz.

The Marshall Islands, one of the world's most flagged countries, last week noted the growing threat of attack within Israeli territorial waters, the Persian Gulf, the Strait of Hormuz, the Gulf of Oman and areas bordering the Red Sea for ships with links to Israel or the United States.

Here are some details about the street:

* What is the Strait of Hormuz?

-This straight separates Iran and Oman.

- It connects the Arabian Gulf in the north and the Gulf of Oman and the Arabian Sea in the south.

- The strait is 33 kilometers wide at its narrowest part, but the shipping lane is only three kilometers wide in both directions.

The UAE and Saudi Arabia are seeking other ways to avoid the strait, including more oil pipelines.

* Why is it important?

About one-fifth of the world's oil consumption passes through the strait every day.

Data from analytics firm Vortexa showed that an average of 20.5 million barrels per day of crude oil, condensate and petroleum products passed through the Strait of Hormuz from January to September 2023.

Most crude exports from Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq, all members of the Organization of the Petroleum Exporting Countries (OPEC), pass through the strait.

- Almost all of Qatar's LNG production also passes through the straight. Qatar is the world's largest exporter.

Vortexa said about 80 million tons, or 20 percent, of the world's LNG flows pass through the strait each year.

JPMorgan said in a note last week, "If the conflict expands to include the closure of the Strait of Hormuz, the world's busiest oil shipping channel, it will halt oil trade in the region, driving up oil prices."

"More importantly, despite Iran's threats over the past years to close the strait, it has never done so."

* Impact of US sanctions

- The United States imposes sanctions on Iran with the aim of stopping its oil exports.

- Iran has threatened to disrupt oil shipments through the Strait of Hormuz if the United States tries to strangle its economy.

The US Fifth Fleet based in Bahrain is tasked with protecting merchant ships in the region.

* Increased tension

- The Israeli army is preparing to launch a ground invasion with the aim of eliminating Hamas, raising the risk of a broader conflict. 

On Wednesday, Iranian Foreign Minister Hossein Amir Abdollahian appealed to Islamic countries to impose an oil embargo and other sanctions on Israel, but OPEC sources ruled out such a scenario. 

In 1973, Arab oil-producing countries led by Saudi Arabia imposed an oil embargo on Western supporters of Israel in its war with Egypt, targeting Canada, Japan, the Netherlands, Britain and the United States. 

Although Western countries were the main buyers of crude produced by Arab countries at that time, today Asia is the main buyer of OPEC crude.

* Previous incidents witnessed in the Strait of Hormuz 

During their war between 1980 and 1988, both Iraq and Iran sought to obstruct the other country's oil exports in what was known at the time as the tanker war.

In July 1988, the US battleship Vincennes shot down an Iranian plane, killing all 290 people on board. Washington called it an accident, while Tehran said it was a deliberate attack.

In early 2008, the United States said Iranian boats had threatened three US Navy ships in the strait.

In July 2010, the Japanese tanker M-Star was attacked in the strait. A militant group known as the Abdullah Azzam Brigades, which is linked to al Qaeda, claimed responsibility for the attack.

In January 2012, Iran threatened to close the Strait of Hormuz in response to US and European sanctions targeting its oil revenues in an attempt to halt Tehran's nuclear program.

In May 2015, Iranian vessels seized a container ship in the strait and fired shots at a Singapore-flagged tanker that reportedly destroyed an Iranian oil platform.

In July 2018, former Iranian President Hassan Rouhani hinted that his country might disrupt the passage of oil through the Strait of Hormuz in response to US calls to reduce Iran's oil exports to zero.

In May 2019, four ships, including two Saudi oil tankers, were attacked off the coast of the UAE near Fujairah outside the Strait of Hormuz.

In January 2021, Iran detained a South Korean-flagged tanker in Gulf waters and arrested its crew members.

In December 2022, the US military said that an IRGC boat came within 150 yards of US warships in the strait.

In May 2023, Iran detained two oil tankers as they passed through the street.

In July 2023, the US Navy said it intervened to prevent Iran from detaining two commercial tankers in the Gulf of Oman.

The navy said in a statement that Iran had "harassed, attacked or detained about 20 merchant ships flying international flags" since 2021.