Iran’s Hormuz Card Wobbles Six Months After Blocking Strait That Carries 20% of Global Oil

About 5 Million Barrels a Day Passed Through Strait Over Past Four Weeks

Shipments From Ports Outside Strait Also Rise as Pressure Builds on Iran

Oil shipments are rising again six months after Iran blocked the Strait of Hormuz. An average of about 5 million barrels a day moved through the waterway over the past four weeks. Another 2.5 million barrels a day was shipped from ports outside the strait to bypass the blockade.

The Wall Street Journal reported on September 4 that the impact of Iran’s closure of the Strait of Hormuz is steadily weakening. Crude prices remain elevated, but the global economy is adapting to the supply shock.

The Strait of Hormuz is a critical chokepoint through which about 20% of global oil supply passes. Iran blocked the strait to put pressure on oil prices and the world economy. It calculated that the move would help force the US to end the war on terms favorable to Tehran.

The Journal said it had become clear that Iran miscalculated when it shut the strait six months ago, effectively trapping 20% of the world’s oil supply. The blockade did not trigger a global economic crisis. Nor did it force President Donald Trump to end the war on terms Iran wanted.

Oil transport through the strait was effectively paralyzed in the early stage of the blockade. Over time, alternative routes emerged. TankerTrackers.com, a maritime intelligence firm, estimates that about 5 million barrels a day passed through the strait on average over the past four weeks.

Ports outside the strait, including Fujairah in the United Arab Emirates, also shipped an estimated 2.5 million barrels a day. Combined flows through the two routes amount to about 40% of prewar oil export volumes.

“Iran’s blockade of the Strait of Hormuz has more holes than the US naval blockade,” Samir Madani, founder of TankerTrackers.com, said. Tehran has been unable to fully seal those gaps.

The US also failed to achieve the result it wanted. After airstrikes did not force Iran to yield, Washington imposed a naval blockade and economic sanctions. But it did not trigger a popular uprising inside Iran or bring about a reopening of the Strait of Hormuz.

Economic pressure is building faster on Iran. The US naval blockade effectively halted Iran’s seaborne crude exports in July. The Iranian government had initially estimated it could hold out for about five months when the US blockade began.

The US naval blockade lasted about two months from April 13. It was lifted for about a month under a June 18 memorandum of understanding on ending the war, but was later reinstated.

“Time is on neither side,” a senior official from a Gulf country said. The clock is ticking faster for Iran because it is under enormous economic pressure.

The Journal said Iran may intensify military pressure as the blockade’s impact fades. Rather than capitulate, Tehran could try to gain leverage in negotiations by escalating the conflict.

Vali Nasr, a professor of Middle East studies at Johns Hopkins University, said Iran’s calculation is that even if it returns to the negotiating table and makes concessions, applying greater military pressure would allow it to concede less. He added that Tehran could worsen the situation on a much larger scale to try to break out of the crisis.

Lee Song-ryeol, Hankyung.com reporter yisr0203@hankyung.com