Strait of Hormuz on the verge of being blocked, disaster may hit the oil market

The United States and Israel have jointly attacked Iran. It has been reported that 56 people, including 53 children, have been killed. In addition, more than a hundred people have been injured, according to various media reports. As part of the counterattack, the Islamic Republic's forces have launched a large number of missiles and drones at Israeli territory and installations of US interests.

Tehran has also launched retaliatory attacks on Gulf countries to target US military bases. This has had the most negative impact on the Strait of Hormuz, an important route for oil and gas transportation in the Middle East.

Israel and the United States launched a joint attack on the country early Saturday (February 28) local time in Iran. This has spread panic among Gulf oil transporters. Oil transportation through the Strait of Hormuz, which is under Iranian control, is gradually decreasing. Almost all major companies have already stopped their ships.

Several major oil and trading companies have suspended shipping through the Strait of Hormuz in the wake of the ongoing attacks. “Our ships will remain in their current positions for the next few days,” said an executive at a leading trading company.

About 20 million barrels of crude oil and other fuels pass through this vital waterway between the Arabian Peninsula and Iran every day. As a result, any suspension threatens a major crisis around the world.

The Strait of Hormuz is the world’s main oil corridor. About one-fifth, or 20 percent, of the world’s oil used and a quarter of all oil transported by sea is transported through this route. It is also a key gas supply route. About 20 percent of the world’s total liquefied natural gas (LNG) trade depends on this route. It is the main means of sending gas from Middle Eastern countries, including Qatar, to Asia and Europe. So if this route is closed, there will be an outcry in Europe and America, a risk they will never want to take.

If transportation in this important oil corridor is stopped, the world market will be in chaos, and the price of fuel oil and gas will increase dramatically.

Already, the price of oil in the international market has increased by about 3 percent on Friday due to fears of an attack. At the end of trading, Brent crude settled at $72.48 per barrel and US WTI at $67.02.

According to analysts, as the war has begun, prices may increase further as soon as the market opens on Monday. There is a risk that the price may even reach $100-130.

Source: Al Jazeera.