Twenty-one per cent of the world’s crude oil currently passes through the Strait of Hormuz, a 21-mile channel that separates Iran from Oman and the UAE.
Iran has threatened to close the Strait of Hormuz in retaliation against increased U.S. sanctions. Recent attacks on an unmanned drone and Japanese and Norwegian-owned oil tankers are seen as tactics to disrupt trade flows without triggering all-out war. Trade flow through the passage of is seen as particularly crucial for the movement of oil and gas to major Asian powers China and Japan.
While a growth in supply has seen global oil and natural gas prices decline in the first six months of 2019, commodity prices may rise due to ongoing tensions, along with maritime insurance costs.
Read more at The Conversation.