Global markets are closely monitoring the Strait of聽Hormuz, a vital corridor for oil and liquefied natural gas (LNG), amid fears that a widening conflict between Israel and Iran could disrupt traffic through the narrow waterway.
The Strait of聽Hormuz, positioned in between the Persian Gulf and the Gulf of Oman, is a narrow but critical sea route that approximately one-third of global oil trade, accounting for 17 million to 20 million barrels of crude oil and condensate passes through daily.
Around 70% of oil volume goes to Asia via this route, with China, Japan, India, South Korea, Singapore, Thailand, Pakistan, and the Philippines among the largest recipients, according to the International Energy Agency.
The route is also essential for LNG exports, especially from Qatar and the United Arab Emirates, which account for 20% of global LNG trade. Europe is a key destination for LNG that transits through聽Hormuz.
While Iran has previously threatened to close the strait in response to geopolitical tensions, it has yet to act on such threats. However, the prospect of a broader regional conflict following Israel鈥檚 airstrikes on Iran has renewed concerns over possible supply disruptions and rising energy prices.
- Strait of聽Hormuz鈥� closure to be 鈥榓bsolute nightmare鈥�
The UK Maritime Trade Organization said on Wednesday that the rising tensions in the region could escalate the military activity in critical waterways and affect maritime transport, while the Baltic and International Maritime Council also warned that any attack could directly impact maritime transport.
Some analysts say that Iran has a lot at stake should they close the route, as almost all the country鈥檚 oil exports and a large portion of China鈥檚 oil imports comes through the Strait of聽Hormuz.
Arne Lohmann Rasmussen, chief analyst and head of research at Global Risk Management, said that the closure of the Strait of聽Hormuz聽would be an 鈥渁bsolute nightmare鈥� for the oil market.
鈥淚f Iran blocks this narrow chokepoint, it could affect up to 20% of global oil flows,鈥� he said. 鈥淎 closure would likely send oil prices above $100.鈥�
- Oil prices spike
Following Israel鈥檚 attacks early Friday on Tehran, the Natanz nuclear facility in Isfahan, and cities including Lorestan and Kermanshah, oil prices surged more than 7%, hitting $73.58, a nearly five-month high.
Senior Iranian military officials, including Iran鈥檚 Revolutionary Guard Corps Commander-in-Chief Hossein Salami and Maj. Gen. Mohammad Bagheri, were reportedly killed in the strikes.
Israel also reportedly struck residential areas in Tehran, resulting in numerous civilian deaths. Several nuclear scientists were also killed in the attack on the Natanz nuclear facility in Isfahan.
By Nuran Erkul and Emir Yildirim
Anadolu Agency
energy@aa.com.tr