As the conflict between Iran and Israel continues to escalate, the Strait of Hormuz has become a point of scrutiny among international observers. Located between Oman and Iran, the strait is one of the world’s most important maritime choke points, with flows through it accounting for more than one quarter of total global seaborne traded oil and around one-fifth of global liquefied natural gas (LNG) trade in 2023. Although oil markets are signalling that the closure of the Strait of Hormuz is considered unlikely, experts warn that if it were to close even for a short time, it would lead to a major spike in oil prices, as well as physical shortages should a disruption be extended. Tehran has threatened to close the strait multiple times before, but it has never fully done so.
The following chart is based on data from the U.S. Energy Information Administration (EIA) and shows how oil flows through the Strait of Hormuz averaged 20.9 million barrels per day in 2023. According to EIA estimates, 83 percent of the crude oil and condensate that went through the passage went to Asian markets, with China, India, Japan and South Korea the top destinations. The United States imported around 0.5 million barrels per day of crude oil and condensate through the Strait of Hormuz that year, accounting for about 8 percent of U.S. crude oil and condensate imports and 2 percent of U.S. petroleum liquids consumption. The EIA explains that only Saudi Arabia and the UAE have operating crude oil pipelines that can circumvent the Strait of Hormuz.
The Strait of Malacca, between the Indian Ocean and the Pacific Ocean, is the sole maritime choke point that is bigger than Hormuz in terms of oil transit volume. It is the primary choke point in Asia, with an estimated 23.7 million barrels of oil having passed through it per day in 2023. Meanwhile, the Suez Canal, the SUMED pipeline, and the Bab el-Mandeb Strait are strategic routes for Persian Gulf oil and natural gas shipments to Europe and North America. The Suez Canal and SUMED pipeline are in Egypt and connect the Red Sea with the Mediterranean Sea, while the e Bab el-Mandeb Strait is between the Horn of Africa and the Middle East, connecting the Red Sea to the Gulf of Aden and Arabian Sea.
