Explained | What is Strait of Hormuz and why is it so important for global trade?

As the US and Israel's war on Iran entered fourth day on Tuesday, oil prices rose ‌for a third straight day. Escalating conflict ‌with Iran and threats to shipping through the Strait of Hormuz heightened fears of supply disruptions from the key Middle East producing region.

Iran's Revolutionary Guards commander ⁠said on ⁠Monday that the Strait of Hormuz was closed and warned that Iran would set any ship attempting to pass on fire, Iranian media reported.

Let's take a look at the details about the major oil export route and why is it so important.

What is the Strait of Hormuz?

The strait lies between Oman and Iran and ⁠links the Gulf north of it with the Gulf of Oman ‌to the south and the ​Arabian Sea beyond. It is 21 miles (33 km) wide at its narrowest point, with the shipping lane just 2 miles (3 km) wide in either direction.

Why does it matter?

About a fifth of the world's total oil consumption passes through the strait.

More than 20 million barrels of crude, ​condensate and fuels passed through the ⁠strait daily last year on average, data from analytics firm Vortexa showed.

OPEC members Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq export most of their crude via the strait, mainly to Asia.

Qatar, among the world's biggest liquefied natural gas exporters, ⁠sends almost ‌all of its LNG through the strait.

OPEC+ top producers Saudi Arabia and the UAE have raised oil exports in recent days as ‌part of contingency plans.

The UAE and Saudi Arabia have sought to find other routes to bypass the strait. ⁠About 2.6 million barrels per day (bpd) of unused capacity from existing UAE and Saudi pipelines could be available to bypass Hormuz, ‌the US Energy Information Administration said in June last year.

The US Fifth ‌Fleet, based in Bahrain, is tasked with protecting commercial shipping in the ‌area.

History of tensions

In 1973, Arab producers, led by Saudi Arabia, slapped an ‌oil embargo on Western supporters of Israel in its war with Egypt.

While Western countries were the main buyers of Middle East crude at the time, now Asia is the main buyer of OPEC's ⁠crude, with the US ⁠a major producer and exporter.

During the 1980-1988 Iran-Iraq War, the two sides sought to disrupt each other's exports in what was called the Tanker War.

In January 2012, Iran threatened to block the strait in retaliation for US and European sanctions. In May 2019, four vessels - including two Saudi oil tankers - were attacked off the UAE coast, outside the Strait of Hormuz.

Three vessels, two in 2023 and one in ​2024, were seized by Iran near or in the strait. Some of the seizures ​followed US seizures of tankers related ​to Iran.

Last year, Iran considered shutting down the strait after US attacks on its nuclear facilities.

(With Reuters inputs)