Why is the Strait of Hormuz so important? - A total blockade would push the price of oil above $200 per barrel
'Bab as-Salam' or 'Gate of Peace' has been the name of the Strait of Hormuz in Arabic for centuries. This key waterway could become the gateway to a wider regional war with global implications, not just in terms of energy. Located at the southern entrance to the Persian Gulf, the strait is located on a peninsula in the territory of Oman, divided into Iranian and Omani territorial waters.
A quarter of global oil traffic and about a third of natural gas traffic pass through this narrow strait. More than a fifth of liquefied natural gas travels through the Strait of Hormuz. According to experts, a total blockade would push the price of oil above $200, as about 15 million barrels pass through it per day.
The crossing routes are jointly established between Iran and Oman, following agreements signed in 1975, and strictly regulated to avoid collisions, using a traffic separation scheme.
The Arab countries most interested are Saudi Arabia, the United Arab Emirates (which have found partial alternatives to maritime trade through Hormuz) and Qatar, a major gas exporter that is still almost entirely dependent on the strait. The waterway is also a key passage for Iran, so much so that some analysts have repeatedly defined the possible blockade of the strait as suicidal for the Islamic Republic. Over the past 46 years, since the change of power in Tehran in 1979, Iran has threatened to close the strait on about 20 occasions, starting with the turbulent years during the bloody war against Iraq (1980-88).
Moments of tension and subsequent threats to close Hormuz have occurred more frequently since the emergence of the 2008 global economic crisis, with a peak between 2018 and 2022. During that period, Iran did not hesitate to target, directly and through its allies in Iraq and Yemen, Western oil interests in the United Arab Emirates and off the coast of Abu Dhabi.
It is precisely in the wake of these constant threats that Riyadh and Abu Dhabi have for years partially diverted their crude oil traffic overland. In the case of Saudi Arabia, by passing through the more expensive pipelines of the Persian Gulf in the east to the Red Sea in the west and, in the case of the Emirates, bypassing Hormuz and reaching the shores of the Indian Ocean.
While Qatar has no alternative infrastructure, it has placed its ships on standby for days, seeking to reduce transit and gas loading times. In addition to the United States, the main potential target of Iranian retaliation, China would also be hurt by the closure of the strait. Beijing is the main beneficiary of energy exports through Hormuz, especially Iranian ones.
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