Oil and gas supply halted due to disturbance in Strait of Hormuz, many tankers left idling, ships getting diverted

The Strait of Hormuz connects the Persian Gulf to the Gulf of Oman in the south and the Arabian Sea further south.

New Delhi: Following the US and Israeli attacks on Iran, tensions persist in the Middle East, and this is impacting the global energy market and maritime trade. Trade shipping through the Gulf region, a major source of the world’s oil and petroleum products, has been disrupted. This disruption has led to a spike in oil and gas prices in the international market.

Also, some oil refineries have temporarily shut down their crude oil processing units, which has affected the production at some refining centers in China, India, and the Middle East while European diesel futures prices reached their highest level since October 2022.

Strait of Hormuz and fuel supply

The Strait of Hormuz is a narrow sea passage located between Oman and Iran. It connects the Persian Gulf to the Gulf of Oman in the south and the Arabian Sea further south. At its narrowest point, it is approximately 21 miles (about 33 km) wide, with a 2-mile passage in each direction for ships. Nearly a fifth of the world’s oil consumption passes through this route.

The Gulf’s major oil-producing countries, Saudi Arabia, Iran, the UAE, Kuwait, and Iraq, export most of their crude oil to Asian countries through this route. Qatar, one of the world’s largest LNG exporters, also sends almost all of its liquefied natural gas exports through this strait. The crisis in the Strait of Hormuz has become particularly concerning for Europe. Countries like Britain, Italy, Belgium, and Poland rely heavily on this route for LNG supplies.

Gases like propane, butane, and ethane, which are used for heating, fuel, and agriculture, are transported through this route.

Shipping movement badly affected

According to shipping data, more than 200 oil and gas tankers are anchored in the Strait of Hormuz and surrounding waters following the Iran conflict. This has increased pressure on the global supply chain and caused oil and gas prices to rise. Major maritime trade between Europe and Asia usually travels through the Suez Canal. However, due to regional tensions, many shipping companies are diverting ships around Africa. This is expected to increase freight costs and increase the prices of imported goods.