Do We Even Need the Strait of Hormuz?

Iran is threatening to close the waterway, through which 20% of the world's oil supply travels. But that would do far more harm to Iran itself than to the rest of the world.

hormuz jan13 p.jpg

Caption: Iranian navy speed boats drill in the sea of Oman, near the Strait of Hormuz / AP

Following scattered attempts at relieving tension between Iran and the U.S., including statements from Iranian officials downplaying the possibility of action in the Persian Gulf, the Iranian Navy announced last week that it would again hold military exercises in the Strait of Hormuz, through which 20% of the world's oil passes.

That same day, Ali Fadavi, the commander of Iran's Naval Revolutionary Guards, suggested to Iranian state media that the world could not persevere even 24 hours without the Strait of Hormuz. Though Fadavi's statement is a blatant exaggeration -- a sudden loss of 20% of the global oil supply would be a severe economic shock, but the world would keep spinning -- it does a raise a key question: Are there viable alternatives to the Strait of Hormuz?

Hormuz, the only exit from the Persian Gulf, lies between Iran on the northern side and Oman on the southern. Almost 17 million barrels of oil pass through it daily, and five of the world's largest oil producers -- Saudi Arabia, Iran, Iraq, Kuwait, and the United Arab Emirates -- are largely or wholly dependent on it, as is Qatar, the world's leading exporter of liquefied natural gas.

There are only two oil pipelines that could be considered ready alternatives. The first is the Fujairah Pipeline. Abu Dhabi, the leading oil producer in the UAE, has spent approximately $3.3 billion building this pipeline, which would bypass the Strait and deliver most of its oil exports to the Indian Ocean. But after years of setbacks, including a six-month delay in 2010 for "design changes," the pipeline has yet to be finished, now slated to start in May or June. Though it would make the UAE largely independent of Hormuz, the pipeline can carry only about 10 percent of the total oil transiting the Strait.

The second is the Saudi Pipeline: The Iran rival's pipeline, known as Petroline, was originally built in 1981, running to the Red Sea port of Yanbu. During the infamous Tanker Wars of the mid-1980s, when fighting between Iran and Iraq threatened to close the Strait, the Saudis increased the capacity to more than 3 million barrels of oil each day and it could now carry 5 million barrels per day. Many experts, including researchers at Rice University, have long called for a significant upgrade to Petroline to bring its capacity up to 11 million barrels per day, enough to carry all Saudi exports with spare capacity for others. This option could take some 18 months to complete, so is not an emergency alternative.

Of course other, even permanent solutions exist, like new or upgraded pipelines leading from Iraq through Syria or Turkey; but again, they would take years to implement. To make matters worse for the West, southern Iraq has close ties with Iran (Vali Nasr, an Iran expert, notes that southern Iraqi "merchants start businesses with Iranian loans," and a million Iranians visit each year, mostly for pilgrimage.) This further complicates the potential for Iraq-based alternatives. Iraq's main Gulf export terminal lies close to Iranian territorial waters.

Presented by

Hamed Aleaziz & Robin Mills

Hamed Aleaziz is an editorial fellow at Mother Jones. Robin Mills, Head of Consulting at Manaar Energy, Dubai, is the author of The Myth of the Oil Crisis. 

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