Under fire, Iran closes Strait of Hormuz, threatening global economy

After days of strikes that have killed nearly 800 of its citizens, Iran has declared a blockade of the Strait of Hormuz. Maritime traffic through the corridor has essentially halted as of today after Iran struck several ships attempting to pass through.

The 20 mile-wide passage connects the Persian Gulf with the Gulf of Oman (which lie between Iran and the Arab Peninsula) and is one of the world’s most economically vital shipping corridors. Millions of barrels of oil flow through the Strait each day, supplying about 20% of the world’s oil consumption. Closing the Strait thus threatens to severely disrupt the global oil supply and send prices soaring. Not only that but Qatar is one of the world’s key suppliers of urea for fertilizers, making up about 15% of global demand. This is likely to drastically increase the cost of farming inputs and ultimately the cost of food. Both oil and food prices are key drivers of inflation.

Just has important as what isn’t coming out of the Strait into the global market is what isn’t coming in. Several of the arid Gulf states – including Qatar, Kuwait, the UAE and Bahrain – depend on imports for up to 90% of their food needs. The vast majority of these imports arrive via maritime shipments through the Strait of Hormuz. Iran has recently struck targets in all of these countries, all of which are US allies and have sizeable US military presences. By closing the Strait, Iran can impose serious hardship on its neighbors, both by restricting their revenue through energy exports and their ability to import supplies to meet their own domestic needs.

The Trump administration is attempting to come up with a response that will get goods flowing through the Strait again. Firstly. the administration is proposing insurance support for ships passing through the lane. Trump has also suggested that US Navy ships could escort cargo ships through the Strait. Not only would this be an extremely costly use of military assets, it would also risk putting even more US service members in harm’s way.

Live Updates: US scrambles to evacuate from Middle East as Iran hits consulate in Dubai, CIA station in Saudi Arabia and US base in Qatar.

Four of the six US soldiers killed in the Iran conflict identified.