World News

Roughly one-fifth of the world's oil moves through the passageway

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"The scale of what is at stake cannot be overstated," said Hakan Kaya, senior portfolio manager at investment management firm Neuberger Berman. He said a partial slowdown lasting a week or two could be absorbed by oil companies.

But a full or near full closure lasting a month or more would push crude oil prices, trading around $70 US on Monday, "well into triple digits" and European natural gas prices "toward or above the crisis levels seen in 2022."
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Key waterway for shipping

The Strait of Hormuz is a bending waterway, about 33 kilometres wide at its narrowest point. It connects the Persian Gulf to the Gulf of Oman. From there, ships can then travel to the rest of the world. [...] While Iran and Oman have their territorial waters in the strait, it's viewed as an international waterway all ships can ply.

The U.A.E., home to the skyscraper-studded city of Dubai, also sits near the waterway.

Long-established trade importance

The Strait of Hormuz through history has been important for trade, with ceramics, ivory, silk and textiles moving from China through the region.

In the modern era, it is the route for supertankers carrying oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the U.A.E. and Iran. The vast majority of it goes to markets in Asia, including Iran's only remaining oil customer, China.

While there are pipelines in Saudi Arabia and the U.A.E. that can avoid the passage, the U.S. Energy Information Administration says "most volumes that transit the strait have no alternative means of exiting the region."

Threats to the route have spiked global energy prices in the past, including during the Israel-Iran war in June last year.
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