Saudi Arabia has a 1,200 kilometer long oil pipeline that lands in the Red Sea. The United Arab Emirates of a pipeline that lands directly in the Arabian Sea. And Iraq, if desired, has a pipe that crosses Turkey to the Mediterranean coast, which reopened last year. Only Kuwait, Qatar and Bahrain, in the world’s most important crude oil trading area, have no other export routes beyond the Strait of Hormuz. And, of course, Iran. The massive joint attack by the United States and Israel against Tehran will soon also hit the financial markets, which were already weighed on Friday by fears of the imminent conflict. And it has already drawn attention to the most discussed oil traffic chokepoint ever, the maritime passage that connects the Gulf of Oman to the Persian Gulf, which is overlooked by various states, primarily Iran, which makes up the entire northern coast (about 2,400 km), followed by Iraq, Kuwait, Saudi Arabia, Bahrain, Qatar and Oman.
An official at the EU naval mission, Aspides, said the ships were receiving transmissions from Iran’s Revolutionary Guards saying that no ships were allowed to pass through the Strait. How concrete and long-lasting the blockade threatened on the first day of a war that promises to be long is yet to be seen. Certainly, the most dangerous non-military threat that Iran can use in retaliation for the attack launched by Donald Trump and Benjamin Netanyahu is represented by the gut of Hormuz. In fact, twenty of the one hundred million barrels of crude oil and condensates exported daily to the world, and a third of the loads of liquefied natural gas, pass through here. All eyes are already on the reactions of the energy markets. Last June, after the Israeli attack on Iran, the first economic consequence was the jump in the price of crude oil with Brent which returned above 74 dollars a barrel to close at +7%. It was a daily surge not seen since 2022, when Russia invaded Ukraine. Also in the summer, JP Morgan estimated that if the passage were blocked, prices would jump up to 120 dollars a barrel with very important consequences on everyday life on a global level. According to an analysis of historical events conducted by Ziad Daoud, chief emerging markets economist at Bloomberg Economics, prices tend to rise by about 4% in response to a 1% reduction in supply.
From the strategic chokepoint, Saudi Arabia releases almost six and a half million barrels every day, Iraq three and a half million, the United Arab Emirates and Kuwait a total of another three million. Not only that: the passage route is also strategic for the trade of liquefied natural gas, since Qatar, the world’s second largest exporter of the fuel, ships LNG worth over 52 billion dollars, mainly through the Strait. Other routes are not accessible. Qatar’s Foreign Ministry has indeed already positioned itself by expressing “its strong condemnation of the Iranian ballistic missile attack” on the country, considering it “a clear violation of its national sovereignty”, and adding that it “reserves the full right to respond to this attack” in defense of its sovereignty, security and national interests, in accordance with international law.
The region accounts for nearly half of the world’s crude oil reserves, and about a third of production. Part of this is sold to the Far East, where China stands out as a strategic buyer of gas supplies but above all of barrels of oil. Strategic especially for Iran, from which it buys one and a half million barrels every day. Tehran is the third largest oil producer in OPEC, with a production of 3.3 million barrels per day, exporting two of these, and a large part of it goes to China, according to Kpler data.
The closure of Hormuz would therefore risk upsetting even Tehran’s most important customer. But the point is another. Oil and natural gas are Iran’s most important exports, accounting for 82% of export earnings. Other exports include chemicals, plastics, fruits, ceramic products and metals. Iran’s main export partners are therefore China (36% of total exports), Iraq (25%) and Turkey (18%), and then the United Arab Emirates and India.
Among the major powers in the area, a possible closure would risk hitting Iran first and foremost. The focal point is the island of Kharg, north of the Persian Gulf: an energy outpost, with numerous loading points, piers, remote mooring points and a storage capacity of tens of millions of barrels of crude oil. It is estimated that it can process about two million barrels a day that Iran ships abroad. The barrels of crude oil and distillates processed by the Abadan, Bandar Abbas and Persian Gulf Star refineries land there.
The same is not true for other petrostates in the region. Saudi Arabia, for example, could circumvent the Hormuz blockade by using the East-West Crude Oil Pipeline, 1200 kilometers long and with a capacity of five million barrels but currently largely underused, which connects the oil fields to the port of Yanbu, along the Saudi coast on the Red Sea. While the Emirates have the Habshan-Fujairah pipeline, with a capacity of one and a half million barrels per day, which allows it to bypass the Strait landing directly on the Gulf of Oman, and therefore on the Arabian Sea.
Iraq also has a pipe that runs through Turkey and into the Mediterranean Sea. The problem in this case is that it can only transport crude oil extracted from the northern fields, thus excluding the southern ones which set sail every day from the port of Basra and coast along Iran up to Hormuz.
Closing the Strait would be detrimental first of all to the Iranian economy which is already in difficulty. It would then encounter opposition from the Western bloc, not just the Americans. “Our naval mission Aspides remains on high alert in the Red Sea and is ready to help keep the maritime corridor open”, said the EU High Representative, Kaja Kallas. In light of the blockade warning issued by the Pasdaran to ships in the area, the alert is now maximum. Qatar has invited all vessels to “temporarily suspend maritime navigation” as a precautionary measure due to the military confrontation between Iran and the US on one side and Iran on the other. The UAE Ministry of Transport urged owners of all vessels to exercise caution “whether private individuals or companies”. The United Arab Emirates company Dana Gas has suspended natural gas supplies from a major gas complex in northern Iraq.
Despite having threatened to close the Strait of Hormuz several times, Tehran has never adopted a total and prolonged blockade of the junction due to the collateral damage that would result. But faced with an existential threat, the Ayatollah regime would hardly hesitate to consider, as a last resort, the idea of dying like Samson, together with all the Philistines.
