Why Closing The Strait Of Hormuz Has Devastating Effects On Global Oil Shipping

 Iran's Revolutionary Guards say the escalation in fighting in the region means the Strait of Hormuz is no longer safe and is essentially closed to traffic, according to media reports.

In a statement carried by the Tasnim news agency, the Guards said ships had been warned to stay away "due to the insecure atmosphere around the strait because of the military aggression by the US and Israel and the responses of Iran." "With the cessation of passage of ships and tankers through the Strait of Hormuz, the strait has been basically closed," the statement added.

DW speaks to military analyst Marina Miron, King's College London, about the implicat

ions of closing the Strait of Hormuz

Iran war threatens prolonged impact on energy markets as oil prices rise

The conflict has already led to the suspension of about a fifth of global crude oil and natural gas supply.

The United States-Israeli war on Iran could leave consumers and businesses worldwide facing weeks or months of higher fuel prices even if the conflict, which is now in its eighth day, ends quickly, as suppliers grapple with damaged facilities, disrupted logistics, and elevated risks to shipping.

Global oil prices have surged by more than 25 percent since the start of the war, driving up fuel prices for consumers worldwide.

The national average petrol price reached $3.41 per gallon ($0.9 a litre) on Saturday, according to the American Automobile Association (AAA), rising by $0.43 over the past week. Goldman Sachs warned oil prices could climb above $100 per barrel if shipping disruptions continue.

The conflict has already led to the suspension of about a fifth of global crude and natural gas supply, as Tehran targets ships in the vital Strait of Hormuz between its shores and Oman, and attacks energy infrastructure across the region.

A nearly complete shutdown of the strait means the region’s top oil producers – Saudi Arabia, the United Arab Emirates, Iraq and Kuwait – have had to suspend shipments of as much as 140 million barrels of oil – equal to about 1.4 days of global demand – to global refiners.

More than 80 percent of global trade moves by sea, according to the World Bank, meaning disruptions in the waterway could increase freight costs and delay deliveries of goods.

Storages in the Gulf filling

As a result of these developments, oil and gas storage at facilities in the Gulf is rapidly filling, forcing oilfields in Iraq and Kuwait to cut oil production, with the UAE likely to cut next, analysts, traders and sources told Reuters.

“At some point soon, everyone will also shut in if vessels do not come,” a ⁠source with a state oil company in the region, who asked not to be named, told Reuters.