Can Iran Close The Strait Of Hormuz After U.S.-Israel Attacks?

The U.S. and Israel entered a fresh direct conflict with Iran early on Saturday via a series of strategic strikes across the Islamic Republic. The move has yet again prompted unilateral declarations from within Iran hinting at a shutdown of the Strait of Hormuz, a key maritime artery for oil and gas shipments from the Persian Gulf out to the Gulf of Oman and beyond.

Earlier, on Saturday, U.S. President Donald Trump declared “major combat operations” were underway against Iran, and called on Iranians rise up and take the opportunity against the regime in Tehran.

As a series of U.S. and Israeli attacks on Iran unfolded, it responded by launching retaliatory strikes of its own on Israel and neighboring nations home to major American air bases including Bahrain, Jordan, Kuwait, Qatar and the United Arab Emirates.

As hostilities unfolded, shipping operators in the region and U.K. Maritime Trade Operations reported threats by the Iran’s Islamic Revolutionary Guard Corps that the Strait was closed to commercial traffic.

Oil prices, already up 12% since last month, are expected to trade higher over the coming days if the conflict escalates and there is disruption in the Strait of Hormuz. Cargo volumes lend relevance to the constant market chatter about a retaliatory blockade of the Strait by Iran.

Saudi Arabia, Kuwait, Iraq, Iran and to an extent United Arab Emirates’ crude and processed liquids, roughly equating to 30% of the world’s traded oil and petroleum products, liquefie2d natural gas cargoes (equal to 20% of the global LNG trade primarily from Qatar) and one-third of the world’s liquified petroleum gas shipments, pass through the Strait daily, according to Lloyds List.

That’s around 30 to 33 million barrels of oil equivalent per day. The figure includes 21 million barrels per day of crude oil and products, or a fifth of the world’s supply. So, will the Iranians attempt to shut the Strait—and can they? While they certainly can for a short period, here’s why they probably won’t.

Why It Won’t Not Happen And Not Last Even If It Does

To begin with, doing so would invite a near immediate naval and air response from the U.S., with President Trump unlikely to sit back and let it happen. It would leave Iran’s own coastline and all its ports vulnerable to a vastly superior American air and naval strike arsenal. Nearby Bahrain is home to the U.S. Navy’s Fifth Fleet and is already part of the hostilities.

Furthermore, the maneuver may not even get off the ground, as at least four of the fleet’s combined task forces routinely patrol the Persian Gulf and the Strait, and their surveillance may take away the element of surprise. Two U.S. carrier strike groups are in the region as well at the moment.

Secondly, the move itself would be self-defeating for Iran as it would impact the country’s own crude oil exports. According to industry data aggregator and research firm Kpler, Iran exports on average 1.65 million barrels per day of crude oil and gas condensate.

The bulk (or 90%) of Iran’s sanction-ridden discounted energy exports go to China. Furthermore, over half of all energy exports passing through the Strait — whether Iranian or not — also head China’s way.

Simply put, China remains the world’s largest global importer of hydrocarbons. A potential shutdown would be very difficult to maintain under pressure from Beijing, the world’s main taker of Iranian crude.

Thirdly, such an event, however temporary, has partially lost its potency given that not all regional crude exports would be knocked offline. Key exporters Saudi Arabia and the UAE have pipeline fallbacks to pivot to.

In the case of the Saudis, 5.1 million bpd can potentially be moved via the East-West pipeline and loaded up from the Red Sea. Although that is currently susceptible to attacks by Iran-backed Houthi rebel forces in Yemen.

The UAE is better placed. Its Abu Dhabi to Fujairah pipeline — which went onstream in 2012 — has a capacity of 1.5 million bpd. Its end point — the port of Fujairah — is the only one of the seven emirates that make up the UAE with a coastline solely on the Gulf of Oman and not on the Persian Gulf that Iran persistently threatens to cut off.

The port, which bypasses the Strait, has the capability to dispatch close to 75% of the UAE’s total crude output if needed.

However, minor skirmishes and general nuisance in the Strait by Iran’s IRGC cannot be ruled out. That is including, but not limited to, attacks on energy cargoes that aren’t for instance destined for Iran’s primary client — China.

Then there is the potential of random hijacking of energy cargoes in the Strait, which has precedent. But overall, a full blockade would be hard to set in motion and ever harder to maintain for long.

All things considered, Iran has been threatening to shut the Strait of Hormuz for since the Islamic revolution in 1979 but has never actually ever attempted to do it or officially done it. While the region now finds itself in uncharted waters and a much wider regional conflict, that fact is quite telling.