Due to the ongoing conflict between Iran and the United States in the Middle East, several leading oil and commercial companies have suspended the transportation of fuel through the Strait of Hormuz, one of the world’s most important waterways. This information has been reported in international media including Reuters.
A senior official of a leading trading company told Reuters, “For the time being, our ships will remain where they are (not move) for the next few days.” He said that after the US and Israeli attacks in the Middle East, companies have taken such a tough decision considering security.
Why is the Strait of Hormuz so important?
This narrow waterway between the Arabian Peninsula and Iran is known as the main artery of the world’s energy supply. According to statistics, about 20 million (20 million) barrels of crude oil and other fuels are transported to different parts of the world through this route every day.
Experts have warned that if oil transport on this route is stopped for a long time, there will be major disruptions in the supply of energy around the world. As a result, the price of oil in the international market may skyrocket and extreme instability may occur in the world economy.
Umud Shokri, an energy analyst at George Mason University, said, ‘Closing the system for a long period of time would create a very dangerous situation. Even a partial disruption would result in large price jumps, supply disruptions, and inflation around the world. In such a situation, there will be a risk of global recession.’ But it is seen as a weapon of last resort. Because, Iran’s own trade will also be seriously affected.
According to the International Energy Agency (IEA), South Asia consumes about 70 percent of the oil transported through the Strait of Hormuz. These include China, Japan, India, South Korea, Singapore, Thailand, Pakistan and the Philippines. Apart from this, Bangladesh and Sri Lanka also directly import crude oil from the Middle East. As a result, any impact on the Strait of Hormuz will affect the oil market of these countries.
The biggest weapon in Iran’s hands now is to control the pulse of global trade and energy supply. And this is the Strait of Hormuz. About one-fifth of the world’s total oil and vast quantities of LNG are transported through this narrow waterway. Iran has threatened to block this route if attacked. However, they have not given any information about the Strait of Hormuz.
If they close the Strait of Hormuz, the price of oil could reach $200 per barrel, creating hyperinflation and recession around the world.
