There war between Israel And Iran risks widening well beyond the Middle East. At the center of international concerns there is also it Strait of Hormuz.
It is a maritime passage as close as it is strategic, since from there it passes about a third of the world oil. A possible block of the Hormuz Strait, or even just a serious threat to its safety, could have immediate effects on energy markets and, cascade, on global inflation.
Because the Hormuz Strait is important
The Strait of Hormuz is a maritime corridor of just 33 kilometers in its closest point, located between theIran to the north and theOman they United Arab Emirates south. Through these waters they pass beyond 20 million barrels of oil per day, equal to almost 30% of the global crude oil consumption, as well as a relevant share of the world trade in gas natural liquefied (GNL). Every month they pass there 3,000 ships. From there pass the goods That from China are sorted towards the Middle East, and beyond.
Its navigation lanes, only three kilometers each, represent an energy “bottleneck” that has no practicable alternatives: there are no alternative maritime routes to bring the oil out of the Persian Gulf.
Although Saudi Arabia and Emirates have made oil pipelines that circumvent Hormuz, their ability remains limited (about 6.5 million barrels per day) compared to the volumes that cross the strait every day.
The oil war effect
The military escalation between Israel and Iran has already raised oil prices. After the Israeli raids on military and civil objectives in Iran, and in response to the launch of hundreds of missiles by Tehran, the price of crude oil has recorded the most significant leap for over three years, going up to +14% In one day.
Although the situation on the markets has partially stabilized in the following hours, the risk remains high: a closure or even a slowdown in maritime traffic in the Hormuz Strait would represent a shock on the global energy offer. According to JP Morgan’s estimates, a direct attack on Iranian energy infrastructures or a temporary block of the strait could make the barrel price splash up to 120 dollarswith a domino effect on inflation: the consumer price index (CPI) in the United States could go up to 5%, reversing the slowdown trend of the last few months.
The most expensive energy would also raise the increase in prices in the sectors related to production and logistics, affecting families and businesses globally. In Europe, already under pressure for US duties and war in Ukraine, the risk is that of a new combination of high inflation and stagnant growth, or the feared stagflation.
USA and China in alert
Despite the threats of Tehranan effective closure of the strait still appears not very likely. Such a move would trigger a direct military response of United Stateswhich maintain a strong naval presence in the area. At the same time, the Chinathe main buyer of Iranian oil, has all the interest in keeping the energy routes open open that feed its industry.
This complex scenario, at least on paper, could contribute to avoiding an escalation that involves the Hormuz Strait, since nobody has an interest in blocking it.
