Iraq News Now

News that two tanker ships have suffered suspected attacks

in the Gulf of Oman, near the strategic Strait of Hormuz, has pushed up the

price of crude oil and focused new attention on the region as tensions have

risen.

Here’s a look at the key waterway and its importance for the

global economy.

WHERE IS THE STRAIT OF HORMUZ?

The Strait of Hormuz is the narrow mouth of the Arabian

Gulf. It is in the territorial waters of Iran and Oman, which at its narrowest

point is just 33 kilometers (21 miles) wide. The width of the shipping lane in

either direction is only 3 kilometers (2 miles). It flows into the Gulf of

Oman, where ships can then travel to the rest of the world. The strait is

viewed as an international transit route.

WHY IS IT IN THE NEWS?

Two oil tankers near the Strait of Hormuz suffered suspected

attacks on Thursday. In all, 44 sailors were evacuated from the vessels and the

US Navy has assisted amid heightened tensions between the United States and

Iran.

The incident comes after the US alleged that Iran used mines

to attack four oil tankers off the nearby Emirati port of Fujairah last month.

Iran has denied being involved. Meanwhile, Iranian-allied rebels in Yemen have

increased their missile and drone attacks on Saudi Arabia, which has been at

war in Yemen against the rebels since 2015.

WHY IS THE STRAIT IMPORTANT?

One third of all oil traded by sea, which amounts to 20% of

oil traded worldwide, passes through the strait.

Major OPEC energy producers Saudi Arabia, the United Arab

Emirates and Kuwait use the strait to export oil to countries, mainly in Asia,

including China, Japan, India and South Korea. The strait is also used to

export gas worldwide from Qatar, the world’s biggest liquefied natural gas

producer.

Anything affecting the narrow passage ripples through global

energy markets, raising the price of crude oil. That then trickles down to

consumers through what they pay for gasoline and other oil products.

HOW MUCH HAS THE PRICE OF OIL RISEN?

The US and international benchmarks for crude oil were up

over 3% on Thursday. That’s a relatively big daily increase but it also comes

after a sustained drop in oil prices.

The international benchmark, Brent, is at $62.17 a barrel.

That’s up 3.7% on the day — but down from over $74 in late April. Prices have

been declining on expectations that the global economy will slow, using less

energy, as well as strong supplies. Analysts say that tensions in the Gulf

region could push prices up again in the longer term, if they are protracted

and there is a real threat to the flow of supplies.

WHAT HAPPENS NOW?

How the US and Iranian governments react to the event will

be key. The United States has recently moved more military forces into the

region, which already hosts the US Navy 5th Fleet in Bahrain and the forward

headquarters of the US military’s Central Command at the vast Al-Udeid Air Base

in Qatar.

Iran has set a July 7 deadline for Europe to find new terms

for Tehran’s nuclear deal with world powers. That accord began to unravel after

the Trump administration unilaterally withdrew from the Obama-era deal and

re-imposed US sanctions aimed at crippling the Iranian economy and pressuring a

change in its regional policies. Iran has threatened it could resume higher

levels of enrichment.