Thursday, July 25, 2019

Strait of Hormuz; main shareholder of world economy

The Strait of Hormuz is a waterway connecting the Oman Sea to the Persian Gulf. This 39 kilometer-long passage is the narrowest part of one of the most strategic international shipping routes for the world and the main artery for the transportation of oil from the Middle East, half of which is the territorial waters of Iran and the other half of the Omani territorial waters, the area in the middle of it has been provided as the international waterway for the passage of ships.
Although the narrowest point in the Strait is just 33 kilometers, the transport lines reach 3 kilometers in both directions because the water is not deep enough for large tankers. It is only 33 to 95 kilometers (21 to 60 miles) is spread in its length.
The lands of Iran and Oman are connected to the Strait of Hormuz, and the two countries have sovereignty. To determine the length of the Strait of Hormuz, the best yardstick is the maritime border between Iran and Oman. The length of the boundary line reaches 202 kilometers. The longest distance between the Strait of Hormuz is 84 kilometers (from the banks of Bandar Abbas in the north to the northernmost point of the Musandam coast in the south), the shortest (between Iranian Lark Island in the north and Omani Island of As Salama in the south) is 33.6 kilometers.
This strait is the second strategic and busy waterway in the world. The Persian Gulf, in general, and the Strait of Hormuz, in particular with many islands and high lands near canal ways, have made the region more important than a waterway in terms of strategic position in the shipping industry, especially in the energy sector.
Also, the special conditions governing this strait caused the traffic of oil tankers to be created and special provisions are set up to prevent the occurrence of sea accidents and facilitate transit.
According to Article 38 of the Maritime Law Convention (1982), the Strait of Hormuz is known as a international strait that can link a part of the high sea to an economic region. The privilege of cruising of ships and merchant ships, submarines and aircraft from this strategic area is based on the national interests of the countries on the shores of the Strait.
Economic features
The Strait of Hormuz is a vital transit route for Middle Eastern oil traders and customers. It is a waterway for transit of goods and energy to markets in Asia, Europe, the United States and beyond. Over a fifth of the produced oil and one third of the world's LNG is exported from the region. Qatar is the largest natural gas exporter (LNG) in the world.
A large portion of OPEC oil (the Organization of Petroleum Exporting Countries) is being produced in the region and exported by oil tankers around the world.
According to the US Energy Information Administration (EIA), in 2018, the daily flow of oil in the Strait is on average 21 million barrels per day, equivalent to about 21% of global consumption. The Straits of Malacca are next in transit with a daily transfer of 15.7 million barrels and the Suez Canal with 4.6 million barrels per day.
Other reasons for the importance of the Persian Gulf and the Strait of Hormuz are the existence of the largest gas and oil reserves in the region, with more than 60 percent of the world's proven oil reserves and 30 percent of global oil trade are led to the region.
Security of Maritime transportation in global economy
Global challenges for the transfer of oil and other energy derivatives from the maritime route have doubled the focus on global energy security. Transit speed and cost reductions are among the most important reasons for countries to pay attention to shipping, and this is seen as one of the pillars of global economic growth, as more than 90 percent of the world's trade is on the sea. Thus, the sustainability of the safety of sea routes, especially the waterways and straits, plays a key role in the prosperity and economic growth of many countries.
Iran and Oman, two countries that dominate the waterway on both sides of the Strait of Hormuz have always stated that they do not want the security and tranquility of this route to be disturbed, but examining the reason beyond the increasing tensions in current juncture with paying attention to the statements of White House officials, especially Donald Trump, takes us into the words of Middle East affairs scholar Patrick Clawson of the Washington Institute for Near East Policy on the importance of the Strait of Hormuz; he said, “If the Strait of Hormuz is closed, the global economy will collapse because it is a vital energy passage.”
In fact, the dependence of many countries on Middle Eastern energy, especially East Asia, has caused their economic growth as well as the world to have a direct relationship with the security of the Persian Gulf, and in particular the Strait of Hormuz. The issue has increased the importance of White House exerting pressure and increasing cost for countries such as China, whose economy grew rapidly and surpassed other rivals. It can be seen since the rise in shale oil production in the United States, which has led them to enter the black gold export market. This has been the cause for the White House's greed to make cost for buyers and even oil vendors in the area.
Regarding the safety and security of commute of ships in the Persian Gulf, especially the Strait of Hormuz, Iran has repeatedly criticized the presence of foreign powers in the region. The Islamic Republic, because of the highest maritime border in the region, especially in the Strait of Hormuz, wants security and calm, but the existence of energy resources in the Persian Gulf, which gives life to the vital vein of the world economy, has led the hegemonic countries to seek insecurity and the tensions aiming at continuing to expand their influence in the region, as they are aware that this is a major shareholder of the world economy.

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