Source: Fortune.com
Summary
Iran’s control over the Strait of Hormuz remains, but global oil markets may reduce dependence on the waterway in a few years. The US military has failed to secure an alternate corridor, and Iran’s drones and missiles scare away commercial vessels. India and Japan have barred their crew members from transiting the strait. Before the US and Israel launched their war on Iran, about 20 million barrels of oil traveled through the Strait of Hormuz each day. Markets have found work-arounds, such as diverting supplies via land-based routes and using rail corridors.
Our Reading
The numbers tell one story. Iran’s chokehold on the Strait of Hormuz remains, but global oil markets are finding ways to reduce dependence on the waterway. The US military’s failure to secure an alternate corridor has led to a decrease in transits through the strait. Meanwhile, countries like Saudi Arabia, the UAE, and Kuwait are expanding their pipeline systems to bypass the strait. Analysts estimate that enough pipeline capacity will be added to insulate over 45% of pre-war Gulf exports by the end of next year.
The strategy enters a familiar phase: Iran’s control over the strait is being offset by new pipeline capacity. Chevron, Goldman Sachs, and other companies are involved in rebuilding and expanding pipelines to reduce dependence on the Strait of Hormuz.
Author: Evan Null
