Ship traffic in the Strait of Hormuz slows down. Here

United States and Israel attacks on iran are focusing attention on Strait of Hormuza narrow but strategically vital waterway in the region that serves as a key artery for global oil shipments.

Shipping traffic through the strait has slowed to a trickle since the outbreak of hostilities last week, raising concerns that the conflict could limit oil supplies and sharply raise energy costs, Wall Street analysts said on Monday. The UK Maritime Trade Operations Center reported attacks on several ships in the area on both sides of the strait and warned of high electronic interference in ships’ navigation systems.

“Infrastructure is at risk across the region, and it is not only at risk from deliberate attacks, but also from inadvertent attacks,” said Kevin Book, managing director at Clearview Energy Partners. “Shrapnel and debris from missile interceptions can fall on facilities and render them unusable as well, so there are a number of challenges that arise from this type of conflict in an area with so much energy production.”

Here’s what you should know about the Strait of Hormuz.

What is the Strait of Hormuz?

The strategic sea passage, located on Iran’s southern border, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. The Strait of Hormuz, long a major trade route, typically allows the flow of about 20% of global oil and liquefied natural gas shipments. Experts describe it as a strategic “choke point” for crude oil.

The strait, nearly 100 miles long and 21 miles wide at its narrowest point, allows the world’s largest ships to transport oil and gas from the Middle East to China, Europe and the United States. Most of that crude oil comes from Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, Qatar and Iran.

What is happening in the Strait of Hormuz?

The Iran war has virtually paralyzed the passage of oil tankers through the strait, and shipping giants Maersk and Hapag-Lloyd said they were suspending all shipments through the strait.

As a result, oil prices skyrocketed Monday over concerns that a prolonged disruption to crude oil supplies in the region could sharply increase energy costs, including gas prices in the United States.

“De facto it is closed and no one dares to go through it,” Arne Lohmann Rasmussen, chief analyst at Global Risk Management, an energy market information provider, told News themezone. “You can be attacked and you can’t get insurance or it’s extremely expensive, so you have to wait until the security situation improves.”

“If oil and gas from the Strait is cut off, that will have significant ramifications for the market,” he added. “Although there is no physical blockade, threats from the Iranians, in addition to drone and missile attacks, mean that oil tankers do not pass through the strait.”

A critical question going forward is the duration of the war and how long the strait will remain too dangerous to cross, analysts said.

“If the reduction in tanker traffic continues for about a week, it will be historic. Beyond that, it would be momentous for the oil market, with prices rising to ration tight supply and impacts on financial markets,” S&P Global’s head of crude oil research, Jim Burkhard, said in a report.

How much could oil prices rise if the strait remains closed?

Iran could struggle to indefinitely throttle shipping traffic through the Strait of Hormuz as the United States and Israel degrade the country’s navy and other military capabilities, analysts say. Blocking the export of Iranian oil to foreign markets would also seriously damage the company’s fragile economy, experts say.

“Iran essentially has two ways of closing the strait. One is to harass or attack ships and the other is to lay mines,” Book of Clearview Energy told the News. “And without a navy, both would be difficult.”

But a prolonged closure of the strait would likely cause oil prices to soar, said Rasmussen of Global Risk Management.

“So far, it’s only been a few days, but if this goes on for weeks or months, the ramifications could be quite serious and we could see triple-digit oil prices,” he told News themezone. “So there will be a significant drag on the global economy, and it could potentially trigger a recession. So in that sense, it’s a powerful weapon.”

That oil will approach or exceed $100 per barrel is not a certainty. Benny Wong, senior energy analyst at Pitchbook, a provider of financial data and analysis, noted that the United States currently has a glut of oil that will protect consumers from rising prices if cross-strait tanker traffic is disrupted for only a few days.

The United States is today the world’s largest oil producer and has increased its reserves, while global oil demand has been weak in recent years amid tepid global economic growth, he said.

Are there alternatives to the Strait of Hormuz?

Oil that would normally pass through the Strait of Hormuz by ship could be exported via other routes.

These include the East-West Pipeline, also known as Petroline, a nearly 750-mile-long pipeline in Saudi Arabia that delivers oil to Red Sea ports. Shipments could also be diverted to the Abu Dhabi Pipeline, a roughly 400-mile pipeline in the United Arab Emirates that transports oil to a facility in the Gulf of Oman.

However, these alternative routes can only accommodate a fraction of the volume of oil that normally passes through the Strait of Hormuz daily, according to experts.

“There are no meaningful alternatives to that flow,” Wong said.