Iran’s Parliament has approved a plan to close the Strait of Hormuz, adding that the final decision lies with the Supreme National Security Council.
Its closure could have far-reaching consequences as the Strait’s crucial geo-strategic location makes it integral to the global economy. The US Energy Information Administration (EIA) calls it the world's most important oil chokepoint.
U.S Secretary of State, Marco Rubio, has called on China to prevent Iran from closing the Strait. “I encourage the Chinese government in Beijing to call them about that, because they heavily depend on the strait of Hormuz for their oil.”
“If they do that, it will be another terrible mistake,” he added, “It’s economic suicide for them if they do it.”
The Strait of Hormuz is situated between Oman and Iran, and connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. However, its geographic position makes it relevant to the entire world.
The critical oil chokepoint is the only way to ship crude from the Persian Gulf to the world oceans, and Iran controls the northern side of it.
How much oil flows through the Strait of Hormuz?
Approximately one-fifth of the world’s total oil consumption and one-third of the world’s liquified natural gas (LNG) passes through the strait. Its closure can lead to a global spike to oil prices, affecting the U.S. and the world.
In 2022, its oil flow averaged 21 million barrels per day, or the equivalent of about 21% of global petroleum liquids consumption. In the first half of 2023, total oil flows through the Strait of Hormuz remained relatively flat compared with 2022 because increased flows of oil products partially offset declines in crude oil and condensate.
In 2024, average daily exports stood at 20.3 million barrels of crude oil and 290 million cubic meters of liquefied natural gas, based on figures from the EIA.
It is 33 km wide at its narrowest point, with a three kilometers wide shipping lane. No other country other than Saudi Arabia and the United Arab Emirates have operating pipelines that can circumvent the Strait of Hormuz, making the global transport of heavily-dependent on the Strait.
The Strait is important for China as well. The world’s second-largest economy purchases almost 90% of Iran’s oil exports, which are subject to international sanctions.
As per EIA, in the first quarter of this year, China brought in about 5.4 million barrels of oil per day via the Strait of Hormuz. India followed with 2.1 million barrels daily, while South Korea imported around 1.7 million barrels each day.
Suicidal Move
Rubio, while speaking on ‘Face the Nation with Margaret Brennan’, said that an Iranian effort to block the strait "would be a suicidal move," as it would invite criticism from the international economies affected by the closure.
"If they do that, the first people that should be angry about it are the Chinese government, because a lot of their oil comes through there," Rubio said. He added that China will have to pay a huge price if the Strait is closed.
"It will have some impact on us. It will have a lot more impact on the rest of the world," he said. "It would be a suicidal move on their part because, I think, the world would come against them if they did that."
What will happen to India?
India has alternate oil sources at its disposal, from Russia, the U.S. and Brazil. Russian oil passage does not employ the Strait, and instead flows via the Suez Canal, Cape of Good Hope, or the Pacific Ocean. Even US, West African, and Latin American flows - though costlier - are vita; backup options.
India's principal supplier of LNG — Qatar — does not use the Strait of Hormuz for its supplies to India. Other sources in Australia, Russia and the US also do not use the Strait.
The Strait of Hormuz has never been fully closed, but it has faced serious threats of closure multiple times due to regional tensions. The risks of closure loomed during the Iran-Iraq war. In 2011–2012 tensions, Iran threatened to close the strait in response to U.S. and EU sanctions; and again in 2019 when the U.S. pulled out of the Iran nuclear deal, Iran was accused of attacking tankers near the strait.
