World News

FACTBOX: The Strait of Hormuz, Iran and the risk to oil

(Reuters) - A cargo ship contracted by the U.S. military fired on an Iranian vessel in Gulf waters on Friday, raising tension between Washington and Tehran in a region vital to world oil shipments.

In January, the United States said Iranian boats aggressively approached three U.S. navy battle ships, warning them they would explode in minutes. Iran has said it was a routine contact.

Analysts say Iran, OPEC’s second largest crude producer, could seek to impede traffic through the strategic waterway if the United States resorts to military action against the Islamic Republic over its disputed nuclear program.

U.S. naval chiefs are concerned Iran could resort to mining the strait and the wider Gulf in a major conflict.

The sea channel which shares Iran’s coastline at the entrance to the Gulf is the world’s most important waterway because of the huge volume of oil exported through it daily.

-- Oil flows through the Strait account for roughly 40 percent of all globally traded oil supply, according to the U.S. Energy Information Administration (EIA). The figure fluctuates with changing OPEC output.

-- In May 2007, the International Energy Agency (IEA) estimated 13.4 million barrels per day (bpd) of crude passing through the narrow channel on tankers, down from 16-17 million bpd before a round of OPEC production cuts.

-- An additional 2 million barrels of oil products, including fuel oil, are exported through the passage daily as well as liquefied natural gas.

-- Exports from the world’s largest liquefied natural gas exporter Qatar also pass through the Strait en route to Asia and Europe, totaling some 31 million metric tons a year.

-- Ninety percent of oil exported from Gulf producers is carried on oil tankers through the Strait.

-- Senior political figures in Iran have in the past talked of impeding traffic through the international waterway if threatened.

-- In February 2006 the IEA noted Arab and Iranian press reports about political pressure in Iran for shipping to be blocked if U.N. sanctions are applied in connection with its nuclear program.

-- One of U.S. Central Command’s (CENTCOM) key missions in the Gulf is to ensure the free flow of oil and energy supplies.

-- Between 1984 and 1987, a “Tanker War” took place between Iran and Iraq, where each nation fired on each other’s oil tankers bound for their respective ports. Foreign-flagged vessels were caught in the crossfire.

-- Shipping in the Gulf dropped by 25 percent because of the exchange, forcing the intervention of the United States to secure the shipping lanes.

-- Iran has admitted to deploying anti-aircraft and anti-ship missiles on Abu Musa, an island strategically located near the Strait’s shipping lanes.

-- The EIA predicts oil exports passing through the strait will double to between 30 million and 34 million barrels per day (bpd) by 2020.

-- Over 75 percent of Japan’s oil passes through the Strait.

-- Merchant ships carrying grains, iron ore, sugar, perishables and containers full of finished goods also pass through the strategic sea corridor en route to Gulf countries and major ports like Dubai.

-- Heavy armor and military supplies for the U.S. armed forces in Iraq and other Gulf countries pass through the channel aboard U.S. Navy-owned, U.S.-flagged and foreign-flagged ships.

-- Geographic location: a narrow bend of water separating Oman and Iran connects biggest Gulf oil producers like Saudi Arabia with the Gulf of Oman and the Arabian Sea.

-- At its narrowest point the Strait is only 34 miles (55 km) across.

-- The Strait consists of 2-mile wide navigable channels for inbound and outbound tanker traffic as well as a 2-mile wide buffer zone.

Sources: International Energy Agency (IEA), U.S. Energy Information Administration (EIA), United Nations Conference on Trade and Development (UNCTAD),, U.S. Navy’s Military Sealift Command, Clarkson shipping consultancy.

Reporting by Stefano Ambrogi