Strait of Hormuz
Source: Wikimedia Commons
Located between Oman and Iran, the Strait of Hormuz (26°34'0.00"N, 56°15'0.00"E) connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. The Strait of Hormuz is the world's most important oil transit chokepoints due to its daily oil flow of roughly 35 percent of all seaborne traded oil, or almost 20 percent of oil traded worldwide. More than 85 percent of these crude oil exports went to Asian markets, with Japan, India, South Korea, and China representing the largest destinations.
Source: Wikimedia Commons
On average, 14 crude oil tankers per day passed through the Strait in 2011, with a corresponding amount of empty tankers entering to pick up new cargos.
In addition, Qatar exports about 2 trillion cubic feet per year of liquefied natural gas (LNG) through the Strait of Hormuz, accounting for almost 20 percent of global LNG trade. Furthermore, Kuwait imports LNG volumes that travel northward through the Strait of Hormuz. These flows totaled about 100 billion cubic feet per year in 2010.
The Strait consists of 2-mile wide channels for inbound and outbound tanker traffic, as well as a 2-mile wide buffer zone.
Contents
Why is this Region Important?
The United Arab Emirates (UAE) and Iran, along with the rest of the Persian Gulf countries (Bahrain, Iraq, Kuwait, Qatar, and Saudi Arabia), produced 30% of the world’s oil in 2012 (nearly 23 million barrels per day of nearly 76,000 million barrels per day produced worldwide). Collectively, Persian Gulf countries hold more than half of the world’s total oil reserves, as reported by the Energy Information Administration (EIA).
Organization for Economic Co-operation and Development (OECD) countries import the majority of their oil from the Persian Gulf; in 2003, 11.6 million barrels per day were exported to OECD countries. The majority of oil leaving this region passes through the Strait of Hormuz.
Geography
At its narrowest point, the Strait is 21 miles wide, but the width of the shipping lane in either direction is only two miles, separated by a two-mile buffer zone.
The Strait is deep and wide enough to handle the world's largest crude oil tankers, with about two-thirds of oil shipments carried by tankers in excess of 150,000 deadweight tons.
Source: NASA
Threats to Disrupt Passage through the Strait
Fortunately, the strait has never actually been shut down, yet the constant political, religious, ethnic, and territorial disputes between the Persian Gulf countries has made the world anxious in anticipation of obstruction.
On September 22, 1980, Iraq invaded Iran, initiating an eight-year war between the two countries. The Iran-Iraq war was the manifestation of deeply rooted religious and ethnic divisions, border conflicts, and political differences. Religious and ethnic divides between the Sunnis and the Shias, coupled with personal hostility between Saddam Hussein and Ayatollah Khomeini, then-leaders of Iraq and Iran respectively, added to the tension.
In 1984, Iran threatened to close the Strait of Hormuz after repeated attacks by Iraq disrupted Iranian shipping. However, in order to continue exporting oil and maintain its economy, Iran needed to keep the strait open and ultimately backed down from this threat.
Another threat to the Strait of Hormuz involves the ongoing dispute between the UAE and Iran over three islands – Abu Musa, Greater Tunb Island, and Lesser Tunb Island – all located near the Strait of Hormuz. The island Abu Musa is of particular interest because it is thought to contain large deposits of oil. By 1992, Iran managed to informally secure the islands even though no official agreement had been made with the UAE.
The Gulf Cooperation Council and the UAE are reluctant to interfere for fear that Iran will retaliate by closing the strait. Claims to the islands are still being disputed, yet Iran has asserted dominance by developing military stations on these islands, particularly guarding Abu Musa. Such development on these strategic islands will only facilitate Iran’s capability to close off the straits and defend itself against US military attacks.
In 1997, Iran once again threatened to close the strait if the United States attempted to interfere with Iranian terrorism against other Persian Gulf countries.
Although Iran has yet to follow through on its threats to close the strait, if it were to happen, alternative routes would need to be utilized. This could add to transportation costs and forestall the global distribution of oil, causing oil prices to increase.
Petroleum is the single most important commodity in today’s world. Our dependence on this resource can be felt in the way society reacts to even minor shifts in oil markets. With demand and consumption increasing, mankind’s dependence on oil only continues to grow. Our dependence is such, that any minor interference in the production or distribution of oil has profound economic and political consequences. Because oil being exported through the Strait of Hormuz is projected to increase, ensuring the flow of oil through this hostile region will continue to be a crucial issue in the years to come.
Bypassing the Strait
Most potential options to bypass Hormuz are currently not operational. Only Iraq, Saudi Arabia, and the United Arab Emirates (UAE) presently have pipelines able to ship crude oil outside of the Gulf, and only the latter two countries currently have additional pipeline capacity to circumvent Hormuz. At the start of 2012, the total available pipeline capacity from the two countries combined, which is not utilized, was approximately 1 million bbl/d. The amount could potentially increase to 4.3 million bbl/d by the end of this year, as both countries have recently completed steps to increase standby pipeline capacity to bypass the Strait.
Iraq has one major crude oil pipeline, the Kirkuk-Ceyhan (Iraq-Turky) Pipeline that transports oil from the north of Iraq to the Turkish Mediterranean port of Ceyhan. This pipeline pumped about 0.4 million bbl/d in 2011, far below its nameplate capacity of 1.6 million bbl/d and it has been the target of sabotage attacks. Moreover, this pipeline cannot send additional volumes to bypass the Strait of Hormuz unless it receives oil from southern Iraq via the Strategic Pipeline, which links northern and southern Iraq. Currently, portions of the Strategic Pipeline are closed, and renovations to the Strategic Pipeline could take several years to complete.
Saudi Arabia has the 745-mile-long Petroline, also known as the East-West Pipeline, which runs from across Saudi Arabia from its Abqaiq complex to the Red Sea. The Petroline system consists of two pipelines with a total nameplate capacity of about 4.8 million bbl/d. The 56-inch pipeline has a nameplate capacity of 3 million bbl/d and its current throughput is about 2 million bbl/d. The 48-inch pipeline had been operating in recent years as a natural gas pipeline, but Saudi Arabia recently converted it back to an oil pipeline. The switch could increase Saudi Arabia's spare oil pipeline capacity to bypass the Strait of Hormuz from 1 million bbl/d to 2.8 million bbl/d, which is only attainable if the system is able to operate at its full nameplate capacity.
The UAE constructed a 1.5 million bbl/d Abu Dhabi Crude Oil Pipeline that runs from Habshan, a collection point for Abu Dhabi's onshore oil fields, to the port of Fujairah on the Gulf of Oman, allowing crude oil shipments to circumvent Hormuz. The pipeline was recently opened and the first shipment of 500,000 barrels of oil was sent through the pipeline to the Fujairah oil terminal where it was loaded on a tanker and sent to the Pak-Arab Refinery in Pakistan. The pipeline will be able to export up to 1.5 million bb/d, or more than half of UAE's total net oil exports, once it reaches full operational capacity in the near future. However, the UAE does not currently have the ability to utilize this pipeline completely, until it ramps to full capacity. In late May, Fujairah ruler Sheikh Hamad bin Mohammed Al-Sharqi noted that this pipeline capacity could rise further to a maximum 1.8 million bbl/d.
Saudi Arabia also has two additional pipelines that run parallel to the Petroline system and bypass the Strait of Hormuz, but neither of them have the ability to transport additional volumes of oil should the Strait of Hormuz be closed. The Abqaiq-Yanbu natural gas liquids pipeline has a capacity of 290,000 bbl/d and is running at capacity. The IPSA (Iraqi Pipeline through Saudi Arabia) is used to transport natural gas to Saudi Arabia's western coast. It was originally built to carry 1.65 million bbl/d of crude oil from Iraq to the Red Sea, but Saudi Arabia later converted it to carry natural gas, and has not announced plans to convert it back to transport crude oil.
Other pipelines, such as the Trans-Arabian Pipeline (TAPLINE) running from Qaisumah in Saudi Arabia to Sidon in Lebanon, have been out of service for years due to war damage, disuse, or political disagreements, and would require a complete renovation before being usable. Relatively small quantities, several hundred thousand barrels per day at most, could be trucked to mitigate closure of the Strait of Hormuz.
Further reading
- World Oil Transit Chokepoints, Energy Information Administration, 2013
- World Crude Oil Production: Persian Gulf Nations, Non-OPEC,and World, Energy Information Administration, 2013
- Rodrique, Jean-Paul. “Straits, Passages and Chokepoints: A Maritime Geostrategy of Petroleum Distribution.” Les Cahiers de Geographie du Quebec, Vol. 48, No. 135, 357-374.
- Persian Gulf Oil and Gas Exports Fact Sheet
- The United States and the Iran-Iraq War
- Island Dispute Between Iran and the UAE
