In public, President Donald Trump has threatened to attack Iran’s energy infrastructure unless it reopens the strait — in the same breath as claiming “great progress” in talks to end the war. In private, he has told aides that he is willing to stop the US military campaign even if the waterway remains mostly closed, the Wall Street Journal reported. Iran has rejected a 15-point peace proposal from the US, and its own five conditions for halting the hostilities include international recognition of Iranian sovereignty over the Strait of Hormuz.
What is the significance of the Strait of Hormuz?
Situated between Iran to its north and the United Arab Emirates (UAE) and Oman to its south, the Strait of Hormuz connects the Persian Gulf to the Indian Ocean. It is around
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100 miles (161km) long and 24 miles wide at its narrowest point. The shipping lanes in each direction are just two miles wide.
The strait is an essential passage for the oil market, handling about a quarter of the world’s seaborne oil trade. Saudi Arabia, Iraq, Iran, Kuwait, Bahrain, Qatar and the UAE all ship crude through the Strait of Hormuz and the majority of their cargoes go to Asia. Gulf countries are also home to refineries that produce large volumes of diesel, naphtha — used to make plastics and gasoline — and other petroleum products that are exported globally via the strait.
The waterway is crucial for the liquefied natural gas market, too. Around a fifth of the world’s LNG supply — mostly from Qatar — passed through this channel last year. Asian countries also buy most of the super-chilled fuel shipped from the Middle East.
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Beyond energy, the Strait of Hormuz is a chokepoint for products such as aluminium, fertilisers and even helium, which is used in semiconductor production.
What has been happening in the Strait of Hormuz?
Iran has sporadically attacked ships in and around the Persian Gulf. While insurance is available for vessels traversing the Strait of Hormuz — albeit at a much higher cost than before the war — most shipowners have been unwilling to risk the loss of life, cargo and vessels.
The jamming of the Global Positioning System has compromised navigation signals. This tactic is used to disrupt shipping, but it’s also a defence strategy to make it more difficult for drones and missiles to find their targets. More than 1,000 ships in the Persian Gulf have been affected by signal jamming, according to maritime intelligence firm Windward.
Iran has continued to move its oil through the Strait of Hormuz, maintaining shipments at nearly pre-war levels. It’s also allowed certain other vessels to cross the waterway along a route that hugs the Iranian coast, often after talks for safe passage and sometimes after requests for payments of up to US$2 million ($2.6 million).
Around 80% of oil tankers that exited the strait in March were either Iranian or from countries on cordial terms with Iran, according to ship-tracking data compiled by Bloomberg.
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Does Iran have sovereignty over the Strait of Hormuz?
Iran has signalled that it intends to continue exercising control over Hormuz transits and monetising this leverage even once the war is over. A bill is making its way through parliament that enshrines Iranian sovereignty over the strait in national law and formalises a toll system for ships crossing the waterway, according to the semi-official Fars news agency.
Under the United Nations Convention on the Law of the Sea, countries can exercise sovereignty up to 12 nautical miles (14 miles) from their coastline — an area known as their territorial waters. The Strait of Hormuz runs through Iran and Oman’s territorial waters. However, nations must allow “innocent passage” of foreign vessels through their territorial waters and must not impede “innocent” or “transit passage” through straits used for international navigation. The treaty also states that countries may not charge foreign ships merely for passage through their territorial waters. While Iran signed UNCLOS in 1982, its parliament never ratified the treaty.
How much can Gulf oil producers bypass the Strait of Hormuz?
Kuwait, Qatar and Bahrain have no other sea route for their exports. Saudi Arabia, which ships the most oil through the Strait of Hormuz, is rerouting crude via a pipeline to the Red Sea port of Yanbu. Flows have reached the pipeline’s full 7-million-barrel-a-day capacity, according to a person familiar with the matter. However, only 5 million barrels a day are actually being shipped from Yanbu — below the kingdom’s usual export levels. The remainder of the oil is going to Saudi refineries.
This alternative route isn’t without risk. Iran has already targeted a refinery in Yanbu, and now that the Iran-backed Houthi militants in Yemen have entered the war, they could resume attacks on vessels in the Red Sea.
The UAE can also bypass Hormuz to some extent. But the port of Fujairah, which sits at the end of a pipeline that connects the UAE’s oil fields to the Gulf of Oman, has been disrupted by drone attacks. And while Iraq is resuming pipeline flows linking its semi-autonomous Kurdistan region to Turkey’s Mediterranean port of Ceyhan, this route can carry only a fraction of what the country normally exports via the Persian Gulf.
How realistic is the prospect of naval escorts through the Strait of Hormuz?
The US has struggled to recruit partners to help provide naval escorts while the fighting is ongoing. Trump has said that countries facing pressure from the effective closure of Hormuz should go to the strait and “get your own oil”.
Military analysts largely agree that escorts would be risky without a ceasefire. The narrow width of the Strait of Hormuz leaves convoys vulnerable to attack and limits the number of vessels that can be escorted at once.
“Until we have neutralised Iran’s layered, asymmetric capabilities — mines, fast attack craft, submarines and drones — we will not want to put commercial or even escort ships through,” said Bob McNally, president of consultancy Rapidan Energy Group and a White House adviser during the administration of President George W Bush.
Should convoy operations materialise and give shippers the confidence to make the journey, it could still take weeks to clear the backlog on either side of the strait. Even then, energy exports from the Gulf may take a while to recover from the damage inflicted by missile and drone attacks. — Bloomberg Quicktake
