The Strait of Hormuz and energy supply security

A war between the U.S.-Israel and Iran has the potential to fundamentally reshape the global economy, energy corridors, logistics routes, energy markets, and consequently, the entire oil and gas equation.

THE IMPORTANCE OF THE STRAIT OF HORMUZ FOR ENERGY

The Strait of Hormuz represents the most critical link in energy supply security.

This is because the Strait of Hormuz is located at a vital transit point for oil and gas producers in the region and for consumer countries in Asia and Europe.

Approximately 20-30% of the world's crude oil trade and 20% of liquefied natural gas (LNG) exports pass through the Strait of Hormuz.

The Strait of Hormuz is the only gateway for major gas producers like Qatar to reach world markets, and it is an irreplaceable route for the oil exports of Saudi Arabia and the United Arab Emirates.

The importance of this route is further amplified by the fact that over 80% of the oil passing through the Strait goes to Asian markets, and the energy transported via the Strait serves as an alternative source for Europe's energy supply security.

POTENTIAL IMPACTS OF A CLOSURE OF THE STRAIT OF HORMUZ

It is clear that Iran's closure of the Strait of Hormuz would pose a serious threat to the energy supply security of major economies such as Japan, South Korea, China, and India, and consequently to the global economy.

For these reasons, and due to the limited availability of alternative shipping routes to the Strait of Hormuz, such an event could lead to price shocks and supply chain disruptions in global markets.

Potential threats to energy supply security would not only affect consumer countries but would also have a profound impact on the economies of many regional countries that are dependent on energy revenues.

Therefore, any potential increase in energy prices caused by restrictions in energy supply security would not be limited to the region; this issue has the potential to trigger a dangerous process on a global scale.

THE GLOBAL ENERGY EQUATION IS BEING RESHAPED

The United States increasing its control over the energy resources in Venezuela, the country with the world's largest proven oil reserves, combined with the struggle for dominance in the Strait of Hormuz—the vital artery of global oil shipments—is expected to fundamentally change the global energy equation.