What is the Strait of Hormuz and why is it so significant?
While there have been no major disruptions to the global oil supply so far, the attacks on Iran – by Israel and then the US – have rattled investors, sending oil futures soaring by around 10%, among fears Iran could retaliate by disrupting shipping in the Strait of Hormuz.
From the perspective of the global economy, there are few places as strategically important. The waterway, located between the Persian Gulf and the Gulf of Oman, is only 21 miles wide at its narrowest point. It's the only way to ship crude from the oil-rich Persian Gulf to the rest of the world. Iran controls its northern side.
About 20 million barrels of oil, about one-fifth of daily global production, flow through the strait every day, according to the US Energy Information Administration (EIA), which called the channel a 'critical oil chokepoint.'
On Sunday evening, following US airstrikes on three of Iran's nuclear facilities, Brent crude, the global benchmark, briefly surged above $80 per barrel, according to Refinitiv data, the first time that's happened since January. Before the conflict, prices had largely hovered between $60 and $75 a barrel since August 2024.
Brent last traded at $78.2 per barrel, while WTI, the US benchmark, was at $75.06.
Whether oil prices will climb further now depends on Iran's response. Rob Thummel, senior portfolio manager at energy investment firm Tortoise Capital, told CNN that a potential disruption to the Iran-controlled sea route would cause oil prices to surge toward $100 per barrel.
A functioning Strait of Hormuz is 'absolutely essential' to the health of the global economy, he said.
A prominent adviser to Iran's supreme leader, Ayatollah Ali Khamenei, has already called for the closure of the Strait.
'Following America's attack on the Fordow nuclear installation, it is now our turn,' warned Hossein Shariatmadari, the editor-in-chief of the hardline Kayhan newspaper, a well-known conservative voice who has previously identified himself as a 'representative' for Khamenei.
Geographic leverage over global shipping gives Iran the 'capacity to cause a shock in oil markets, drive up oil prices, drive inflation, collapse Trump's economic agenda,' Mohammad Ali Shabani, an Iran expert and editor of the Amwaj news outlet, told CNN.
When it comes to moving oil, the Strait is actually much narrower than its 21-mile official width. The navigable shipping lanes for massive supertankers are only about two miles wide in each direction, requiring vessels to pass through both Iranian and Omani territorial waters.
But Vandana Hari, founder and CEO of Vanda Insights, which tracks energy markets, sees Iran's blocking of the Strait as a 'remote tail risk.' The presence of a beefed-up US naval fleet in the region is both a deterrent and a response tool, she said.
'Iran has a lot to lose and very little, if anything, to gain by attempting to close the Strait,' Hari said. 'Iran cannot afford to turn its oil-producing neighbors, who have been neutral or even sympathetic towards the Islamic Republic as it faced Israeli and US attacks, into enemies, any more than trigger the ire of its main crude market, China.'
A closure of the Strait would be particularly detrimental to China and other Asian economies which rely on the crude oil and natural gas shipped through the waterway. The EIA estimates that 84% of the crude oil and 83% of the liquefied natural gas that moved through the Strait of Hormuz last year went to Asian markets.
China, the largest buyer of Iranian oil, sourced 5.4 million barrels per day through the Strait of Hormuz in the first quarter this year, while India and South Korea imported 2.1 million and 1.7 million barrels per day, respectively, according to the EIA's estimates. In comparison, the US and Europe imported just 400,000 and 500,000 barrels per day, respectively, in the same period, according to the EIA.
On Sunday, India's Minister for Petroleum and Natural Gas Hardeep Singh Puri sought to reassure jittery investors on X that the country has 'diversified' its oil supplies in the past few years.
On Sunday, India's Minister for Petroleum and Natural Gas Hardeep Singh Puri said on X that the country has 'diversified' its oil supplies in the past few years.
'A large volume of our supplies do not come through the Strait of Hormuz now. Our Oil Marketing Companies have supplies of several weeks and continue to receive energy supplies from several routes,' he said. 'We will take all necessary steps to ensure stability of supplies of fuel to our citizens.'
CNN's John Towfighi, Nadeen Ebrahim, and Rhea Mogul contributed reporting.
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CNN
12 minutes ago
- CNN
Why the Strait of Hormuz is so significant
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Bloomberg
12 minutes ago
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Iran Launches Missiles at US Base in Qatar: State Media
00:00 This is not a surprise. The US has been bracing for and positioning for some kind of retaliation. Well, and Iran has been warning of one scarlet. The important context here is that the chief of staff of Iran's armed forces in a video message earlier today, promised that Iran would be responding to the US attacks on its nuclear sites proportionately and decisively. And perhaps the Wall Street Journal here is indicating that that retaliation may potentially be coming soon, as it were. Iran, according to US officials briefed by the Wall Street Journal, is moving missile launchers into place for a potential attack. And the Department of Defense is tracking what they describe as, quote, a credible threat to US forces in the Middle East. This also comes as we're tracking a number of developments centered around Cutter in particular. Cutter, of course, closed off its airspace earlier today in a move that they said was precautionary. The US embassy in Qatar has also issued a warning to Americans to shelter in place. And China's embassy has urged citizens in Qatar specifically to avoid a loaded airbase. This is important because that base houses house hosts, hoses, thousands of US troops. It is our largest installation in the Middle East. It's actually headquarters of US Central Command, in addition to housing Qatari air forces, as well as the Royal Air Force. And so that is very a very key military installation that the US has that there is a lot of buzz about could potentially be targeted. Keeping in mind, of course, that President Trump had previously promised if there were retaliation, the US would respond with even greater force than the attacks we saw over this weekend is the administration has issued repeated warnings not to target U.S. military assets or personnel. But again, the The Wall Street Journal is reporting here that Iran does look to at least be moving into a position in which it could do so. And as you're speaking, Kelly, some other headlines have just crossed as well, according to Axios. Iran has launched a six missiles toward US bases in Qatar. And Reuters has also reported that there have been explosions heard over Qatar's capital of Doha. So again, you reference how Qatar has stopped some flights. That would make sense given they had anticipated some kind of retaliatory action. And again, according to Reuters, the explosions have been heard over covers capital of Doha. Kelly, tell us a little bit more about the mindset in Washington. Clearly, the weekend attacks is what everyone's talking about. But as we were just discussing with Max Layton of City, there's a lot of, I guess, expectation within the commodities market that now that the strikes are over and the US kind of waits to see how Iran responds, there's very much an expectation that the administration will return its focus to domestic matters. What are you seeing in Washington? Well, much of that will depend on the way in which Iran responds. Scarlett, I would note that as we're seeing this reporting about explosions outside Doha, the Arabic baby air base, which I just mentioned, is just southwest of Doha. So it very much could be included in whatever this materializes to be. And if there are any U.S. casualties, that could be something that President Trump feels compelled to respond to. Again, to quote him directly from this weekend, he warned any retaliation will be met with force far greater than what was witnessed during the initial attack on Saturday night. So that does indicate that the US could still be prepared to act militarily if necessary. The President likely will be getting input from his National Security Council team. He is supposed to meet with them in the Oval Office. That will be closed to press just about 20 minutes from now at 1 p.m. Eastern time so we could get more of a readout then as to what exactly the US is thinking. But of course, the president has to keep in mind various political pressures. There is not much appetite in the US for the US to get involved in another direct war in the Middle East. The MAGA base of the President's party in particular, of course has much more of an isolationist bent, doesn't want to see the US be that interventionist. So he has to consider those domestic political pressures as well as he surveys the geopolitical geopolitical landscape here. But a lot is going to depend on what we can confirm around these reports as to whether or not Iran has decided to attack U.S. military assets and if there are any casualties that could result from that.
Fox News
12 minutes ago
- Fox News
Americans in Qatar told to shelter in place and airspace shut down as Iranian military threatens action
The U.S. Embassy in Qatar told Americans to shelter in place until further notice Monday and Qatar temporarily closed its airspace following the weekend's attacks on Iran. "The competent Qatari authorities announce the temporary suspension of air traffic in the country's airspace, in order to ensure the safety of citizens, residents, and visitors," Qatar's foreign ministry said in a statement, adding that it would "not hesitate to take all necessary preventive measures within this context." The ministry promised to update the public as developments arise. The embassy said it made the recommendation "out of an abundance of caution" but provided no other details. Qatar is home to Al Udeid Air Base, where approximately 10,000 U.S. soldiers are deployed. The United Kingdom's Qatar embassy issued a similar warning after the U.S. The advisory came after the State Department issued a warning to American citizens on Sunday. "There is the potential for demonstrations against U.S. citizens and interests abroad. The Department of State advises U.S. citizens worldwide to exercise increased caution." Iran vowed to retaliate against the U.S. after American B-2 bombers dropped 14 bunker buster bombs on three Iranian nuclear sites. "The criminal US must know that in addition to punishing its illegitimate and aggressive offspring, the hands of Islam's fighters within the armed forces have been freed to take any action against its interests and military, and we will never back down in this regard," Abdolrahim Mousavi, the new chief of staff of the Iranian armed forces, warned in a statement. Qatar's foreign affairs spokesperson said the "advisory from a number of embassies to their citizens do not reflect the existence of specific threats." "The security situation in the country is stable," the statement said, adding, "the relevant authorities are closely monitoring the situation and are ready to take all necessary measures to ensure the safety of citizens, residents, and visitors." Qatar has struck a delicate balance between friendly relations with its neighbor Iran and the West. Some 40,000 U.S. troops are stationed across the Middle East. While Iran is largely expected to launch a counterattack to the weekend's bombings, Israeli strikes have taken out Iran's missile launchers and depleted its stock of medium-range missiles. The U.S. homeland, meanwhile, is under a "heightened threat environment" following the weekend's strikes, including "low-level cyber attacks against US networks by pro-Iranian hacktivists are likely, and cyber actors affiliated with the Iranian government may conduct attacks against US networks."
