The Strategic Importance of the Strait of Hormuz: The World's Lifeline

Any body of water that is a narrow passageway is an area that will attract the interests of many countries, particularly super powers. With President Donald Trump's recent comments about launching potential military action against Iran, it brings into the spotlight maybe the most vital strategic chokepoint in the world, the Strait of Hormuz.

The over year long campaign by Yemen's Ansarullah group, which has enacted a blockade in the Red Sea, due to Israel's war in Gaza, sealed off the Bab al-Mandab Strait, which connects the Arabian Sea to the Suez Canal.

This blockade has caused Israel's Port of Eilat to go into bankruptcy, and caused financial difficulties for Egypt. The tiny country of Djibouti, which sits along this strait, has military bases hosting at least nine different countries, including China and Japan. This coupled with the ongoing U.S. bombing campaign on Yemen shows just how important this passage is.

Then there is the passage on the other side of the Arabian Peninsula, the Strait of Hormuz, a less than 35 mi (57 km) passageway, which sits between Iran and its Arab neighbors, opening up the Arabian Sea to the Persian Gulf, who's importance may dwarf its counterpart on the other side.

Black Gold

The Strait of Hormuz provides the passageway to the oil rich countries of Oman, the U.A.E, Saudi Arabia, Kuwait, Iraq and Iran, and it's through here nearly 30 percent of the world's oil passes through every day. It is also one of the trade arteries that connects trade between Asia and Europe.

For the countries whose shores sit inside the Persian Gulf, it is their economic lifeline which allows them to export their valuable commodities to the rest of the world. However, it is not just these countries who depend on safe passage through the Strait, but the entire world in some form.

Economic Impact

A complete closure of this passageway would cause a global economic recession that would likely surpass 2008 within 30 days and begin rivaling 1929 after three months and lead to long lasting scars on the global economic system and supply chains. The effects on the U.S. who would lead a hypothetical campaign against Iran, and its allies in Europe, would be felt quickly.

The United States consumes roughly half of the worlds oil, and imports half of the oil it consumes daily. The U,S, currently has an estimated 19 days worth of strategic oil reserves at current consumption levels, which could be stretched to 50-60 days under severe rationing. The price of oil would surge past 150 dollars a barrel within days, more than double the current 75 dollar average. A "stable" oil price under these conditions would likely still be well above 100 dollars.

The associated increases in costs of shipping and production of goods imported to the U.S. would cause prices to skyrocket. Eventually, energy shortages would cause factories to shut down which would lead to higher unemployment in the country and before long, industrial farming in the U.S. would become too expensive causing some farms to go bankrupt and lead to more food shortages.

Europe, who is more reliant on imports of energy, imports over a quarter of its daily oil from the Middle East. They have also been looking to Qatar and the U.S. for liquified Natural Gas (LNG) to replace Russian gas since the destruction of the Nord Stream Pipeline and shutdown of Ukrainian transit. Qatari LNG would be blocked and the U.S. would likely horde what they have. What they can get their hands on would be much more expensive and much less in total volume, leading to disruption of industry and associated inflation and shortages as in the U.S. but on a much bigger level.

Germany, for example, is currently undergoing de-industrialization after ending cheap gas imports from Russia, and have not been able to stabilize their economy with the more expensive imports they have been trying to replace it with.

Iran's Card

With tensions in the Middle East rising due to the Trump Administrations increasingly aggressive posture towards Iran, there is much discussion about how successful potential U.S. strikes would be, and the capabilities of Iran to defend itself. One understated aspect to all of this is the one main leverage Iran has in a potential conflict: Their ability to close down the Strait of Hormuz.

On April 14th of last year, the same day Iran launched airstrikes on Israel for the first time, the Iranian Revolutionary Guard Corps (IRGC) seized an Israeli-linked cargo ship in the strait, and have shown a capability over the years to disrupt ships moving through should they wanted to take such an action.

Given how a 14 month long bombing campaign in Yemen by two American Presidents has yet to fully secure the Red Sea from Ansarullah, a much stronger Iran who has a much larger military and greater capabilities than their friends in Yemen should not be encouraging to those who think a blockade of Hormuz could be lifted painlessly.

Iran has the position and capabilities to enact a blockade. They have a well equipped navy for the task, including submarines, equipped with precision anti-ship missiles and small and fast attack boats that can harass commercial shipping without being noticed. They have also shown the ability to hijack and seize ships without firing upon them as we have seen in the past. And what Iran can fire from the water itself they can also fire from land. They have ballistic missiles that can target American bases on the Arabian Peninsula and U.S. ships that try entering the Persian Gulf to escort commercial ships.

There's also Iran's strategic islands of Abu Musa and Greater and Lesser Tunb. These islands sit roughly halfway between Iran and the U.A.E. and the main shipping lane through the Strait passes between Abu Musa and the Greater Tunb. Iran has militarized these islands which gives them a good vantage point, and an even narrower choke point within the Strait to enforce a blockade.

A U.S. bombing campaign that comes up short of toppling the government, something that shouldn't be seen as a guarantee, would mean the blockade would get lifted only when Iran says it does.

Iran having a nuclear weapon, or having a modern air force to go along with an integrated air defense system with their already current ballistic missiles are seen as equalizers to the U.S. and Israel in the region, however its ability to shutdown the Strait may truly be their "nuclear" option exercised by conventional weapons.

The strategic importance of the Strait of Hormuz is certainly something that Iran can hold against any country that seeks to attack them, but the importance of the passageway is to the whole world and more of a reason to avoid conflict in the region.