The Parliament of Iran has approved the closure of strategically important hormuz straight after US attacks on its three nuclear sites. Iran’s government media gave this information on Sunday. Major General Kovsari, a member of the National Security Council of Irani Parliament, said that the Supreme National Security Council of Iran, the Supreme National Security Council of Iran is required to finalize the decision.
If Iran shuts down the hormuz straight, it will disrupt global trade, increase oil prices and can cause instability in the global economy. 20 percent of global oil consumption passes through the hormuz straight. Such steps can cause more instability in the Middle East, where tension has been increasing in the last 20 months. The region is already going through unrest due to Israeli war with Hamas and Hizbollah in Gaza and Lebanon, conflict with Iran and political instability in Syria.
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What is Hormuz Strait and why is it so important?
Hormuz Strait is a narrow but extremely important waterway that connects the Gulf of Persia to the Gulf of Oman and the Arabian Sea. It is located between Iran on the northern coast and the Musandam Peninsula in the south – which is part of Oman and United Arab Emirates. This waterway is about 167 km long, which is reduced to about 33 km at its most narrow point, and three km wide shipping lanes for the coming and going sea traffic.
Hormuz Strait (Strait) serves as the only sea route for oil tankers transporting crude oil from the Persian Gulf, making it one of the world’s most important crude oil import corridors for global energy security. About 17 million barrels of oil- or about 20 to 30 percent of the world’s total oil consumption passes through the strait. In fact, about 88 percent of all the oil exports from the Persian Gulf have to pass through this narrow waterway, as alternative pipelines and routes are limited. Apart from oil, about one -third of the world’s liquid petroleum gas (LPG) also passes through this corridor.
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What if the hormuz oil corridor is closed?
If Iran closes or blocks the hormuz Strait, this will disrupt the flow of a significant part of global oil exports, which will huge reduction in supply and will rapidly rise in oil prices. Members of OPEC (Organization of Petroleum Exporting countries), Saudi Arabia, Iran, United Arab Emirates, Kuwait and Iraq mostly export their crude oil from this waterway, mainly in Asia. The UAE and Saudi Arabia have tried to find other avenues to bypass Strait.
The US Energy Information Administration said in June last year that about 2.6 million barrels per day could be available to bypass Hormuz from the existing pipelines of the United Arab Emirates and Saudi Arabia. Since this waterway is very narrow and military sensitive, efforts to block it can further increase regional tension. If Iran shuts down the hormuz straight, it will have economic and geopolitical effects.
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What will be the impact on India with the closure of Hormuz Strait?
However, India fulfills its oil and energy needs from many other sources including Russia and some Arab countries, but a large part of its supply also comes from Iran. Experts believe that the closure of the hormuz waterway may affect Indian supply, which can increase oil prices, which will also affect the pricing of goods. In a conversation with Aaj Tak’s associate channel India Today TV, Union Petroleum Minister Hardeep Singh Puri, while removing the concerns of increasing oil prices amidst Israel-Iran struggle, said that India has prepared for adverse circumstances and energy rates are under control.
Can Iran really block the hormuz waterway?
Generally, Iran has no legal right to stop cargo ships passing through this main inhibitory point of oil and gas imports. According to Bloomberg News report, Iran can forcefully shut down Hermuz Strait. If the Iranian Navy tries to block the waterway, it may face a strong response from the navies of the fifth fleet of the US Navy and other western countries patrolling the region. Closing hormuz will also affect Iran financially, because it will not be able to export his petroleum product.
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According to Bloomberg News, Iran itself is dependent on transit for its oil exports, and a export terminal is present in Jask located at the eastern end of the hormuz waterway. The blocking of Hormuz Strait will also disturb China, as it is the largest buyer of Iranian oil and a major partner. China used its veto power to the United Nations Security Council to save Iran from facing the restrictions or proposals led by Western countries.