The Strait of Hormuz, between Oman and Iran, is the world's most important oil transit chokepoint

Background

The Strait of Hormuz, located between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. Chokepoints are narrow channels along widely used global sea routes that are critical to global energy security, and the inability of oil to transit a major chokepoint, even temporarily, can create supply delays, raise shipping costs and increase world energy prices. In 2022, oil flow through the Strait of Hormuz averaged 21 million barrels per day (b/d), or the equivalent of about 21% of global petroleum liquids consumption. Flows through the strait in 2022 and the first half of 2023 made up more than one-quarter of total global seaborne traded oil, and around one-fifth of global liquefied natural gas trade also transited the Strait of Hormuz in 2022. Only Saudi Arabia and the United Arab Emirates (UAE) have operating pipelines that can circumvent the Strait of Hormuz: Saudi Aramco operates the 5-million-b/d East-West crude oil pipeline, and the UAE links its onshore oil fields to the Fujairah export terminal on the Gulf of Oman with a 1.5 million b/d pipeline. The U.S. Energy Information Administration estimates that around 3.5 million b/d of effective unused capacity from these pipelines could be available to bypass the strait in the event of a supply disruption. The U.S. Energy Information Administration also estimates that 82% of the crude oil and condensate that moved through the Strait of Hormuz went to Asian markets in 2022. China, India, Japan, and South Korea were the top destinations for crude oil moving through the Strait of Hormuz to Asia.