Shipping companies halted traffic through the Strait of Hormuz, with vessels rerouted for safety. Photo / 123rf
With traffic suspended and several ships attacked since the launch of US and Israeli strikes on Iran, vessels have clustered on either side of the Strait of Hormuz, a strategic waterway vital to global energy markets.
Iranian hardliners had threatened to block the strait in the event of a US attack, but never followed through.
While Iran has not officially closed it, its Revolutionary Guards have warned against transiting it.
Ships that sail through have risked being hit, and maritime security agencies said three vessels were attacked at the weekend.
As Tehran attacked targets across the Gulf over the weekend to avenge slain supreme leader Ayatollah Ali Khamenei, the Strait of Hormuz’s status has raised fears of a global oil shock.
Shutting it completely would “amount to committing suicide out of fear of death”, Ali Vaez, Iran project director at International Crisis Group, told AFP.
This is what to know about developments in the vital corridor, which carries a quarter of the world’s seaborne oil and a fifth of all liquefied natural gas:
Iran’s Revolutionary Guards have warned that the Strait of Hormuz, which connects the Gulf to the Indian Ocean, is unsafe because of US and Israeli attacks.
At least two ships have been struck, one off Oman’s coast and another off the UAE’s, British maritime security agency UKMTO said.
Each was struck “by an unknown projectile” that caused a fire which was later contained, according to UKMTO.
Another projectile hit “in very close proximity” to a third vessel, also off the Emirati coast.
Iranian state television reported an oil tanker was “sinking” after being struck while “attempting to illegally pass through”.
It was not immediately clear if it was the same ship reported by maritime agencies.
Oman, which mediated US-Iran talks, said drone strikes targeted its Duqm commercial port and an oil tanker off its coast.
The UN’s maritime agency urged shipping companies to “exercise maximum caution” and “avoid transiting the affected region”.
Shipping companies Maersk, MSC and Hapag-Lloyd have all halted traffic through the strait.
Geneva-based MSC has told its vessels in the Gulf to head to safe shelter and has suspended all bookings for worldwide cargo to the Middle East.
German shipowners Hapag-Lloyd announced it was halting traffic “due to the conflict in the Middle East and the official closure of the Strait of Hormuz by relevant authorities”.
Danish shipping giant Maersk rerouted all vessels around the Cape of Good Hope around Africa, bypassing the Suez Canal and the Bab al-Mandeb Strait – the region’s other vital waterways.
The Strait of Hormuz, situated between Iran and Oman’s Musandam exclave, is the Gulf’s only link to the open ocean and global markets.
Only Saudi Arabia and the UAE have pipelines that allow them to bypass it, but those carry a fraction of the crude oil that transits Hormuz.
According to Kpler analyst Homayoun Falakshahi told AFP, crude oil prices could soar past US$100, a price point not seen in years, in the event of a prolonged war.
The Opec+ alliance has hiked production quotas by 206,000 barrels per day for April.
But for Jorge Leon, an analyst at Rystad Energy, “if oil cannot move through Hormuz, an extra 206,000 barrels per day does very little to ease the market”.
More than 80% of the oil and gas moving through the strait is destined for Asian markets, according to the US Energy Information Administration.
That includes Iran’s own oil exports, 90% of which are bought by China, historically a key backer of Tehran.
Iran “closing the Strait of Hormuz will bring down the roof on its own head”, according to ICG’s Vaez.
Choking the waterway “would alienate Iran’s most important economic partner, China, which relies on energy imports from the Gulf for about 25% of its needs”, he said.
For Vaez, Iran is more likely to “take a page from the Houthis’ playbook” and target specific ships transiting the waterway, which would “jack up insurance premiums and global energy prices”.
War has impacted the Strait of Hormuz before, but Dirk Siebels, senior analyst at Risk Intelligence, says “there is no real precedent”.
“Tanker traffic was seriously impacted during the so-called ‘tanker wars’ in the 1980s, but over the past 40 years, trade patterns and the shipping industry in general have changed significantly.”
Oil transit was disrupted in 1984 when warring Iran and Iraq attacked each other’s shipping, damaging or destroying more than 500 vessels.
- Agence France-Presse