The Bubble of Closing Hormuz Strait

Dr. Faisal Mrza

Iran's equivocal threat against regional oil exports to close Hormuz Strait is a losing card used in every tension between Iran and the United States, while Iran regime is responsible for exacerbating the Middle East's regional instability



Hormuz Strait is an international crossing and the most important waterway for more than 30% of the world's oil exports, and about 40% of the world’s total oil, refined products and petrochemicals exports. Meanwhile Iran's own economy depend on the free passage of goods and oil tankers through the strait



In 2012, Iran threatened to suspend oil movements via the strait in response to the sanctions and warned that not a "drop" of oil would pass through. Yet, not a single threat ever materialized despite the repeated threats of closure throughout the years. Iran has only the media noise to make it dangerous to push oil prices up sharply, which rose beyond $100/bbl in 2012. Freight and insurance costs for oil tankers also increased by then. Nevertheless, the closure of Hormuz Strait is more damaging to consuming countries than the oil-producing countries, hence, it'd collapse the world economy. Moreover, blocking Hormuz Strait would be counterproductive to Iran's aim of trying to keep strong ties with European Union and China



At the worst-case scenario, Saudi Arabia already taken measures from being impacted by this threat even if never materialized. Saudi Arabia has other reliable export alternatives at the West Coast in the Red Sea that linked by the East-West crude oil pipeline with capacity of 5 million barrels per day. The cross-country pipeline will be expanded to reach capacity of 7 million barrels per day soon



Saudi Arabia as the most reliable crude oil supplier and the largest oil exporter has unique oil facilities with diversified logistics and won’t listen to this threat bubble, even if some media tries to inflame it and make it a serious threat. This is nothing more than a bubble of a losing card from a loser regime that still looking for another arena to spread corruption and chaos




Dr. Faisal Mrza



Energy and Oil Marketing Adviser (Former OPEC / Saudi Aramco)

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