30% of Global Oil Passes Through the Risk-Plagued Strait of Hormuz

The Strait of Hormuz represents the main artery for global energy supplies, with about 30% of total seaborne crude oil passing through it worldwide, as well as nearly 20% of liquefied natural gas (LNG), which Asian and European countries rely on for power generation.

The strait's importance doubles amid escalating geopolitical tensions in the Gulf region, where global crude oil prices depend on the continued freedom of navigation through this narrow passage, which is about 33 kilometers wide at its narrowest point.

Financial markets constantly monitor any signs of disruption to tanker traffic through the strait, as a supply halt even for a few days leads to sharp disruptions in oil and gas prices around the world.

Analysts believe that the lack of equally efficient alternative routes makes the Strait of Hormuz a structural vulnerability in the global energy system, prompting oil-importing countries to store strategic reserves in anticipation of any sudden crisis.

What Do These Terms Mean?

Liquefied Natural Gas (LNG): It is natural gas that is cooled until it turns into a liquid to facilitate its transport by ships over long distances, and then regasified upon arrival for use in power generation and heating.

Strategic Energy Chokepoint: A strait or maritime canal through which vast quantities of oil or gas pass, such that its closure would cause a global energy crisis. The Strait of Hormuz is the most prominent globally because there is no alternative of equal efficiency.

Strategic Reserves: Quantities of oil stored by countries in secure locations for use in the event of supply disruptions. Industrialized countries are required to maintain reserves sufficient for at least 90 days.