Iran sanctions threat to Hormuz
July 25, 2018 -- The Strait of Hormuz is one of the world’s most crucial oil transport routes, with a third of global oil tanker traffic -- carrying 18.5 million barrels of crude and condensate -- passing through the strait every day.
On May 8, U.S. President Donald Trump announced that America was to exit the Iran nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA). Besides, Trump said he would reinstate previously lifted sanctions on the Islamic Republic, including secondary sanctions on countries continuing to trade with Iran.
The Trump administration has demanded that its allies end all imports of oil and gas condensate from Iran by November 4, or else face sanctions, with no waivers to be granted.
So far, other signatories to the JCPOA -- Russia, China, Germany, Britain, and France -- have pushed back against Washington and mostly continued to import Iranian oil, but that position now looks likely to change.
Iran’s oil exports had risen from 1.5 million barrels per day (bpd) in 2015, when the JCPOA deal was agreed, to 2.61 million bpd in June 2018. China, India, South Korea, Japan and the EU were the largest importers, taking 1.92 million bpd in June.
Iranian President Hassan Rouhani has suggested that Iran can severely disrupt oil trade in the Persian Gulf if its own exports are stopped, while the Islamic Revolutionary Guard Corps (IRGC) has threatened to close the strategic Strait of Hormuz.
At its narrowest point, the shipping route -- used by 14 oil tankers every day -- is only two nautical miles (3.7km) across. Not just oil, but almost a third of global liquefied natural gas supplies also pass through the strait.
The task of keeping the waterway open would fall to the U.S. Navy’s 5th Fleet, based in Bahrain. It would have to counter any escalation of tensions by the 125,000-strong IRGC, 90,000-strong Basij militia and special operations Quds force, operating fast attack boats out of a dozen naval bases in the Persian Gulf.
If that strait is blockaded, the world’s daily supply of oil will plummet by more than 30 per cent, and oil prices would immediately spike.