BlogPost 8

The Strait of Hormuz is the world’s most important oil chokepoint because of the large volumes of oil that flow through the strait. In 2018, its daily oil flow averaged 21 million barrels per day. The inability of oil to transit a major chokepoint, even temporarily, can lead to substantial supply delays and higher shipping costs, resulting in higher world energy prices. I still remember about the blockage at the Suez Canal during the pandemic and how it hindered the world trade in few days. Like, the Strait of Hormuz, Suez Canal is one of the busiest trade routes in the world and the blockage of the Canal roughly cost 12 per cent of global trade and was holding up trade valued at over $9 billion per day.

Strait of Hormuz being only possible way for the ships to move back and forth from the Persian Golf on the West and Oman in the East. Persian Golf is particularly important as 8 countries share the southern coast. Recent attacks on the narrow waterway has fuelled tensions between Iran and USA. Relations between Washington and Tehran have deteriorated since Trump withdrew last year from a 2015 nuclear deal between Iran and world powers, and reimposed and extended sanctions to throttle Iran’s vital oil trade. I really hope the rising tensions between Iran and USA do not lead to bloodshed. If Irans halts the passageway it will cripple global trade.