Consumers are set to pay higher prices, but US producers could benefit, analysts say.
The United States and Israel’s war with Iran has spilled over into the Strait of Hormuz, one of the world’s most critical energy chokepoints, prompting a surge in oil prices.
Shipping through the strait, which carries one-fifth of the oil consumed globally as well as large quantities of gas, has ground to a near halt amid Iranian attacks on oil tankers in the region.
A commander in Iran’s Revolutionary Guard Corps (IRGC) said on Monday that the strait was “closed” and that any vessel attempting to pass through the waterway would be set “ablaze.”
At least five tankers have been damaged, two personnel killed and about 150 ships stranded around the strait, which separates Iran and Oman.
Oil prices rose above $79.40 per barrel on Monday, after hitting $73 per barrel on Friday amid rising tensions in the lead-up to Saturday’s joint US and Israeli attacks on Iran.
“Traffic is down at least 80 percent,” Michelle Bockmann, a senior maritime intelligence analyst at Windward, told Al Jazeera, adding that the shipping industry had already been grappling with a “huge spike” in freight costs for routes out of the Middle East and the Gulf.
Cormac McGarry, the director of maritime intelligence and security services at Control Risks, said that mariners received a message from Iran via the international distress frequency on Saturday that the strait was closed.
“Every ship in the area would have heard that… and it was enough for most ships to pause.”
Vessel tracking service Kpler showed that limited traffic continued in the strait – primarily ships flying the flag of Iran and its major trading partner China – on Sunday.
Roudi Baroudi warned of the repercussions of any escalation in the Strait of Hormuz: oil could reach $100
Also, in a television interview on Al Jazeera, international energy expert Roudi Baroudi stressed that no country has the right to close the Strait of Hormuz, emphasizing that the 1982 United Nations Convention on the Law of the Sea is clear on this matter, particularly Article 44, which explicitly guarantees the “right of free passage” for all foreign vessels.
Baroudi explained that the transit corridor in the strait is about two nautical miles wide (approximately three kilometers) and is designated for the passage of various types of ships, whether energy tankers, commercial cargo vessels, or food shipments, affirming that these vessels enjoy the right of passage without obstruction, inspection, or any arbitrary restrictions.
He noted that the Sultanate of Oman has ratified the Law of the Sea Convention and adheres to its implementation. There is also a maritime border demarcation agreement between Oman and Iran dating back to 1974 that must not be violated. Meanwhile, both Iran and the United Arab Emirates have signed the convention, though its provisions have not yet been fully implemented.
Regarding the impact of the current tensions, Baroudi considered that oil reaching $100 per barrel is not unlikely if escalation continues, pointing to the recent rise in liquefied natural gas prices. He warned that any significant increase in energy prices would have direct repercussions on the global economy and would increase living pressures and the cost of living in countries around the world.
Source: www.aljazeera.com by: By Megha Bahree, Reuters & LGOMP
