Iranian authorities have recently threatened to halt maritime traffic through the Strait of Hormuz in response to alleged attacks by the US and Israeli regimes. However, experts doubt that a long-term blockade of the strategic shipping lane is feasible, as it would severely damage Iran's own economic interests.
Approximately 70% of Iran's non-oil trade passes through ports that depend on access via the Strait of Hormuz, according to gas and economic analyst Dalga Khatinoglu of the London-based outlet Iran International. Energy expert Sara Vakhshouri emphasized that closing the strait would be counterproductive for the country itself, as critical imports like food and the majority of exports destined for China and India would be disrupted.
Oil and gas prices have surged since the US and Israeli regimes began their attacks on Iran. Analysts estimate that the cost of a barrel of oil could rise to $100 (€86) or higher if maritime traffic through the Strait of Hormuz becomes too perilous. About 20% of global crude oil is shipped via this sea passage, with over 80% of these deliveries going to Asian countries, primarily China, India, and Japan.
A closure of the strait would not only choke off oil shipments but also interrupt deliveries of aviation fuel and liquefied natural gas (LNG). Iran International reports that 30% of Europe's aviation fuel and 20% of global LNG is transported through the passage. Many countries, including the US, EU member states, the UK, Japan, and Canada, maintain strategic reserves to withstand several weeks of temporary supply disruptions.
Iran has faced Western sanctions since the 1979 Islamic Revolution, with additional UN sanctions imposed between 2006 and 2015 over its nuclear program. Sanctions were relaxed from 2016 to 2018 during Iran's participation in the Joint Comprehensive Plan of Action (JCPOA), but US President Donald Trump reinstated strict measures after withdrawing the US from the agreement.
Western sanctions have provided a loophole for Iran to continue trading, as no penalties are imposed on states that do not comply with the restrictions. This has led Iran to send over 80% of its exports to China, which is now the largest buyer of Iranian, Venezuelan, and Russian oil. Sanctions against these three countries have forced them to sell oil at discounted rates, reducing Iran's export revenues while increasing transportation costs due to the need for shadow fleets and intermediaries.
Nikolay Kozhanov of Qatar University notes that China is currently the indispensable lifeline for Iran's oil exports, purchasing the bulk of sanctioned crude. Therefore, China's economic development is more critical for Iran than any new UN sanctions. The sanctions have also enabled China to diversify its oil imports, distancing itself from suppliers closely linked to the US-led security and financial system.
Kozhanov argues that sanctions have weakened Iran despite its economic resilience, as they severely restrict access to new technologies, international financing, and investments. This is likely to reduce Iran's oil production in the long term. Iran may remain present in global oil markets, but as a structurally weakened, high-discount supplier, gradually trading stable volumes for lower per-unit revenue, reflecting a slow-burning negative spiral in its oil sector.
Source: www.dw.com