Strait of Hormuz .. Does Iran's threats affect the world oil trade?

Mohammed Afzaz

Iran has threatened to close the Strait of Hormuz if it is banned from using it, as the United States announced on Monday that it would end the exemptions it granted last year to the main buyers of Iranian crude.

This is not the first time that Iran threatens to close the most important oil artery in the world against the backdrop of the US escalation towards Tehran's interests, at a time when experts believe that such threats remain difficult to implement, because of the huge negative effects on the oil trade in the world and the region, Accepted by Washington.

The consequences are dire
The expert and former Iraqi oil minister Issam Chalabi believes that the Iranian threat to close the Strait of Hormuz will not come into force because its consequences will be dire for all.

Chalabi said in an interview for Al Jazeera Net, "We are talking about a strategic corridor through which the amounts of more than twenty million barrels of oil per day, and the threat of closure can not be implemented." That represents about one-fifth of world oil consumption per day.

He notes that it is "not the first time and will not be the last" in which Iran looms by closing the Straits of Hormuz without actually happening on the ground.

The Strait of Hormuz is a vital shipping route linking oil producers in the Middle East to markets in Asia, Europe, North America and beyond, and has been at the heart of regional tensions for decades.

The US Energy Information Administration estimates that about 18.5 million barrels of sea-transported oil passed through the Strait of Hormuz in 2016, accounting for 30 percent of the crude and oil liquids shipped by sea that year.

Crude oil and condensate exports were 17.2 million barrels per day (bpd) in 2017, and 17.4 million bpd in the first half of 2018, according to Vortexa Oil Analysis data.

Chalabi stresses that the negative effects of the closure of the Strait of Hormuz in the event that it will affect not only the Middle East energy-producing countries, especially Saudi Arabia, but that the interests of all will stop, including Iran, and says "not only oil will be affected but also gas."

A military clash
It passes through the Strait of Hormuz 80 to 90 percent of Saudi oil, Iraq, UAE and Kuwait to major markets such as China, Japan, South Korea, India and Singapore.

"If there is a real closure of the Strait of Hormuz, it will have a major impact on the major oil producers in the region as a whole," said analyst Nidal al-Khouli. "The biggest loser will be Saudi Arabia, the world's biggest oil exporter.

But previous experiences, al-Khouli told Al Jazeera Net, confirm that this is no more than a threat, expressing his belief that the world's major powers will not allow the closure of this main artery.

"If we get to this point, it means a military clash, because Hormuz is an international corridor," he said.

Previous threats
Iran has threatened to impose restrictions on passage in the strait if attacked, according to Iran's Revolutionary Guards commander, Mohammad Ali Jafari, in June 2008.

Tehran again threatened in January 2012 to close the Strait of Hormuz in response to US and European sanctions targeted its oil revenues.

In July 2018, Iranian President Hassan Rowhani hinted that his country could disrupt oil transit through the Strait of Hormuz in response to US calls to cut Iran's crude exports to zero.

On Wednesday, Iranian Foreign Minister Mohammad Javad Zarif said the United States should be prepared for consequences if it tried to prevent Tehran from selling its oil and using the Strait of Hormuz.

This came after an American invitation to Tehran to keep the straits of Hormuz and Bab al-Mandeb open.

No zero for exports
Last Monday, US Secretary of State Mike Pompeo said the United States would not extend any exemptions that excludes Iranian oil importers from US sanctions after May 2. "We will reach zero, we will reach zero with everyone."

But Chalabi believes that Washington will not be able to tarnish Iranian exports, stressing that Iran can sell oil away from the eyes of Americans.

"A 100 percent reduction in exports is not possible, but there is already an impact," Chalabi said.

Financial analyst Nidal al-Khouli said Iran could sell oil to major countries such as China and Russia.

He says Tehran has "a large area of ​​export, and believes that a peaceful solution to the crisis is better than entering into conflicts that will harm everyone."

"Iran will continue to sell its oil, we will continue to find buyers for our oil, and we will continue to use the Strait of Hormuz as a secure transit corridor for our oil sales," Zarif told a conference in New York.

Brent crude hit $ 75 a barrel on Thursday for the first time since the end of October under pressure from the anticipated tightening of US sanctions on Iran.