They have sparked fears of wider US-Iran attacks in the greater region, which could take place in and around the Strait of Hormuz, a narrow body of water linking the Persian Gulf to the Gulf of Oman, which feeds into Arabian Sea and the rest of the world.
Some 21 million barrels of crude and refined oil pass through the strait every day, the EIA said, citing 2018 statistics.
That’s about one-third of the world’s sea-traded oil, or $1.2 billion worth of oil a day, at current oil prices.
How important is the strait to the US and its allies?
The US and many of its allies have billion-dollar reasons to protect the Strait of Hormuz.
The majority of Saudi Arabia’s crude exports pass through the Strait of Hormuz, meaning much of the oil-dependent economy’s wealth is situated there. Saudi state-backed oil tanker Bahri temporarily suspended its shipments through the strait after Iran’s missile strikes in Iran, the Financial Times reported.
The UK Royal Navy has also sent vessels to escort British ships to protect them from potential attacks amid the heightened tensions, the Press Association reported.
Trump noted that much of China and Japan’s oil flow through the strait, and added: “So why are we protecting the shipping lanes for other countries (many years) for zero compensation.”
While a large proportion — 76% — of oil flowing through the chokepoint does end up in Asian countries, the US still imports more than 30 million barrels of oil a month from countries in the Middle East, Business Insider has reported, citing the EIA.
That’s about $1.7 billion worth of oil, and 10% of the US’s total oil imports per month.
How do US-Iran tensions affect it?
Oil prices swung wildly as news broke of Iran’s missile strikes on US targets and the subsequent relief that neither lives nor energy infrastructure were harmed.
If Iran followed through with these threats, it would likely cause huge disruption to the global oil trade. As the strait is so narrow, any sort of interference in tanker traffic could decrease the world’s oil supply, and send prices shooting up.
Global oil prices have proven vulnerable to tensions between Iran and the West before. After the Trump administration said in April 2019 it would stop providing sanctions waivers to countries who purchase Iranian oil, prices rose to their highest level since November the year before, Axios reported.
And because the US would be affected by global oil prices, regardless of the origin of the oil, Washington would still have an interest in protecting the Strait of Hormuz.
Kenneth Vincent, an economist at the Department of Energy, told a 2017 conference, cited by The Atlantic: “The origin of whatever molecules are consumed in the United States does not matter.”
“What matters is that if there’s a shooting war somewhere in the Middle East, those molecules will cost more and that will harm the American economy,” he said.
How likely is Iran to shut down the strait?
Iran is more likely to disrupt traffic in the Strait of Hormuz than to engage in an all-out conventional war with the US, which is much stronger militarily.
But doing so comes with high costs to Iran.
To close down the entire strait, Iran would have to place at least 1,000 mines with submarines and surface craft along the chokepoint, security researcher Caitlin Talmadge posited in a 2009 MIT study. Such an effort could take weeks, the study added.
Disrupting oil traffic on the strait would also result in oil importers around the world looking beyond the Middle East for their sources, and further reduce reliance on the region.
Iran’s oil industry is already suffering after the US imposed sanctions designed to stop countries from importing Iranian oil earlier this year.
As Michael Knights, a Middle East expert at the Washington Institute think tank, told The Atlantic last May: “They’d be cutting their own throat if they close the strait.”