Global Oil and the Strait of Hormuz
Economists say that nearly twenty-five percent of the world’s oil supply is shipped via the Strait of Hormuz. During a one month period this spring over a thousand oil tankers sailed through the strait, making it of vital importance to industry and business in all corners of the globe. The strait is a small body of water that separates the countries of Kuwait, Iraq, and Iran. The shipping that goes through the Strait winds up in Korea, Japan, India, and eventually the United States. That’s why this vital link in the fossil fuel chain has been in the news lately.
India and China are now the two biggest buyers of Middle Eastern oil; their economies have come to depend on it. If that supply of oil is threatened or cut off, the two countries could become very aggressive in protecting their economies from a massive downturn. The United States keeps a naval presence just outside of the Strait of Hormuz; but whether it’s to protect oil tankers or to keep China and India from intervening in our foreign policy in the region is a question that keeps diplomats up at night.
The turmoil in the Strait of Hormuz has a direct bearing on gas prices in the U.S. Higher gasoline prices this summer are going to have a negative impact on many businesses, from tourism to the grocery market. So Americans need to keep an eye on that remote piece of watery real estate.