Former Iranian Economy Minister Ehsan Khandouzi has said that tankers and LNG cargoes should only transit the Strait of Hormuz with Iranian permission, and this policy should be carried out from 18 June for a hundred days."
Although it is unclear if he was speaking in a personal capacity or on behalf of the Iranian government, it remains unlikely that Tehran would close the strait in its war with Israel, as it would invite US involvement. Yet some analysts think Iran could close it as a last resort if it came under dire stress, especially if the US decides to join the war directly.
At no more than 50km wide, the strait carries up to 20% of the world’s oil exports at around 20 million barrels of oil each day. Any closure could cost the global economy greatly, even if only for a short time.
Saudi Arabia’s oil fields are mainly located along its east, adjacent to the Arabian Gulf. It exports about 88% of its oil, Iraq 98%, and the UAE 50%. Kuwait and Qatar also export oil. All this passes through the strait, up to 30 tankers a day, through an entry/exit channel that is just over 10km wide.
Even as the goods and commodities have changed over time, the Strait of Hormuz continues to play a key role as a passageway for the Gulf’s exports and imports. Today, due to the sensitive nature of oil supplies and their importance to world economies, any conflict could lead to increased oil prices and insurance costs. It is not just oil, though. Qatar transports its natural gas through the strait. It is the world’s largest exporter of natural gas, its exports accounting for a quarter of global gas consumption.
A long-coveted waterway
If there is a pitched battle over this narrow maritime passage, it would not be for the first time. The strait, which connects the Arabian Gulf with the Gulf of Oman, has been important for centuries and has a long history dating back to ancient times. In August 1553, it was the scene of a major naval clash between Ottoman and Portuguese fleets, with the latter emerging victorious—and gaining control of the waters.
According to some historians, Arabs established the Kingdom of Hormuz on the eastern coast of the Gulf (in modern-day Iran) in the 10th century. The kingdom was renowned for breeding and exporting horses to India, as well as for its extensive trade between the western Gulf coast cities, South Asia, and East Africa.
Ships bound for India and the African coast were loaded with exports and returned with spices, precious stones, textiles, gold, and ivory. Hormuz, therefore, became a trading hub in the southern Gulf. The Portuguese controlled Hormuz for a century from 1514 until the Persians, or Safavids, expelled them in 1622 after allying with the English.
Fast forward to the 20th century, when, in 1980, war erupted between Saddam Hussein's Iraq and Iran, fresh on the heels of the latter's Islamic Revolution in 1979, which toppled the US-backed Shah. At the time, Iraq attacked Iranian oil tankers to prevent them from exporting their oil. From 1984, Iran began responding, targeting Gulf oil tankers, since Saudi Arabia and Kuwait had sided with Iraq. It became known as the Tanker War (1981-88), which has been described as "a campaign of economic attrition and political intimidation".
Around 450 vessels were targeted. Iraq was responsible for 283 attacks while Iran carried out 163. At the start of the war, America warned that if the Strait of Hormuz were closed, it would be forced to intervene. The Iranians said they would maintain the status quo and announced that all waters within 40 kilometres of their coast would be an exclusion zone, instructing ships bound for non-Iranian ports to sail west of this line. The conflict reinforced both the strait's value and the importance of protecting it.
Act of last resort
Some analysts think that Iran could close the strait as a last resort if it comes under dire stress. If it succeeds, oil prices could top $120 per barrel, since it would cut supplies to economies like China, India, and Europe. Other analysts think Iran would not close the strait, in part because this would harm both its enemies and its allies.
