General Information

  • Has oil flow through the Strait of Hormuz been disrupted before?
  • What might lead the Iranians to try to close the Strait of Hormuz?
  • What is a "significant" disruption?
  • What role might the United States play in response to an Iranian effort to disrupt shipping in the Strait of the Hormuz?
  • Would a disruption in the Strait of Hormuz hurt Iran?
  • How might major oil consumers "“ including China, Japan, and Western European countries "“ react to an attempt to close the Strait of Hormuz?
  • How might the UN Security Council react to an attempt to close the Strait of Hormuz?
  • What military forces does the United States have in the Persian Gulf area, ready to respond to a threat to oil flows?
  • Is it reasonable for American strategic planners to assume that Iranian decision-makers rationally calculate their country's best policy choices to achieve their goals, or should Americans assume that Iran's actions are unpredictable?
  • Why is the Iran-Iraq War sometimes referred to as the Tanker War?
  • Why is Persian Gulf sometime referred as the Arabian Gulf? 

Commercial Issues

  • How much does the world's economy depend on the flow of oil through the Strait of Hormuz?
  • Could attacks on oil tankers disrupt the flow of oil by raising the cost of insurance, even if the attacks themselves failed to physically stop the flow of tankers?
  • Could Persian Gulf oil suppliers export their oil through a different route if the Strait of Hormuz were closed?
  • Does an effort to disrupt oil flow through the Strait of Hormuz need to hit tankers?
  • Is there enough world slack capacity to compensate for stopped Strait of Hormuz throughput? 

Tankers

  • How vulnerable is an oil tanker to military attacks?
  • How much oil does a tanker hold?
  • What are the tanker market characteristics?
  • What are the characteristics of a tanker crew?
  • What does it cost to schedule an oil tanker?
  • What percentage of the price of gasoline is spent on transport costs? 

Weapons

  • What specific techniques might Iran employ to try to disrupt the oil flow in the Strait of Hormuz?
  • How do modern weapons sink ships? 

General Information:

Has oil flow through the Strait of Hormuz been disrupted before?

During the Iran-Iraq War, Iraq initiated an anti-shipping campaign to disrupt Iran's oil exports. Iran retaliated by attacking ships belonging to Iraq's trading partners. The targets of both actors were mostly neutral third-party oil tankers. During this eight year war, 411 ships were attacked, 239 of which were petroleum tankers. However, despite repeated Iranian threats to close the Strait of Hormuz during the Tanker War, Iran did not follow through with this threat.

The only chokepoint to be completely blocked by a relatively recent regional conflict was the Suez Canal between 1967 and 1975. However, the Suez Canal is only 984 feet wide at its narrowest point, whereas the Strait of Hormuz is 25-30 miles wide at its narrowest point.

For more information: The Tanker War

What might lead the Iranians to try to close the Strait of Hormuz?

An Iranian attempt to close the Strait of Hormuz could result from any number of circumstances. However, some plausible scenarios are:

  • Iran goes first
    • Planned, methodical attack: new leadership engages the U.S. based on ideological grounds
    • Rushed attack: response to sanctions or because of IRGC entrepreneurship
  • Iran goes second
    • Delayed, methodical attack: deferred calculated response to U.S. or Israeli attack
    • Rushed attack: immediate response to U.S. or Israeli attack 

For more information: Potential Disruptions

What is a "significant" disruption?

A "significant" disruption in the global oil market would need to cause more than temporary panic. In order for Iran to cause a significant disruption, it would have to prevent at least four to six million barrels a day from exiting the Strait for several weeks " creating enough of a supply shortage to overwhelm inventories and spare capacity in the global oil production and distribution system.

What role might the United States play in response to an Iranian effort to disrupt shipping in the Strait of the Hormuz?

The United States would likely take active measures to protect tankers. To keep the energy markets stable and calm, the United States is the self-declared protector of Middle Eastern oil. This role was reinforced with the Iraq War, beginning in 2003, and the increased tensions between the U.S. and Iran. In 1987, in the later stages of the Iran-Iraq War, the U.S. reflagged Kuwaiti tankers with U.S. flags and provided security of shipping to and from neutral Gulf countries. Since that time, the U.S. Coast Guard and Navy have maintained a liaison office (MARLO) for working with commercial shipping traffic in the Arabian Gulf. Today, the United States maintains a formidable military presence in the Persian Gulf.

For more information: Armed Forces in the Region, The Tanker War

Would a disruption in the Strait of Hormuz hurt Iran?

Overall, trade (especially energy trade) dominates Iran's economy. Because nearly all of Iran's oil export terminals and large ports are located within the Persian Gulf, Iran depends on the Strait of Hormuz for its economic well-being.

For more information: Iran and Oil

How might major oil consumers "“ including China, Japan, and Western European countries "“ react to an attempt to close the Strait of Hormuz?

The top importers of crude oil exported through the Strait of Hormuz are Japan, the Republic of Korea, the U.S., India, Egypt, China, Singapore, Taiwan, Thailand, and the Netherlands. However, if Iran disrupts oil flows in the Strait, the whole world would be affected by the oil price increase. As such, the major world powers would likely push for a more aggressive stance against Iran by supporting the U.S. effort and pushing for economic sanctions.

The European Union (E.U.) and the U.S. have a common strategic interest in keeping traffic flowing through the Strait of Hormuz. Since Japan does not currently have or want the military capabilities to project its power in the Middle East, it would likely support U.S. initiatives to protect energy transit in the Strait. Because China has no history of military basing or access agreements, much less using military forces for political or strategic advantage in or near the region, China would likely rely on the U.S. for maritime security if conflict were to occur in the Strait.

On the other hand, Iran would surely maneuver to encourage countries around the world to blame the United States for any conflict in the Arabian Gulf. China and Russia in particular have often viewed Iran's diplomatic and military activities in a different light from the standard American line.

For more information: Armed Forces in the Region, International Opinion

How might the UN Security Council react to an attempt to close the Strait of Hormuz?

In the past, the UN Security Council has taken an assertive stance against Iran. However, Russia and China have been more lenient on Iranian security matters than the United States, the United Kingdom and France. In response to the Iranian nuclear program, on October 25, 2007, the UN Security Council passed two resolutions sanctioning Iran, with a third resolution that was held up by the Chinese and Russian opposition. Nevertheless, Iran closing the Strait of Hormuz, would be an indisputable belligerent action, which would infuriate the world. As a result, the UN Security Council would likely impose economic sanctions on Iran.

For more information: International Opinion

What military forces does the United States have in the Persian Gulf area, ready to respond to a threat to oil flows?

Currently, the United States supports the Fifth Fleet headquartered in Manama, Bahrain, to exercises operational control over maritime forces in the area around the Strait. It bears responsibility for areas including the Arabian Gulf, Red Sea, Gulf of Oman, and parts of the Indian Ocean.

In addition to the naval base, the U.S. Coast Guard has maintained a presence in the Gulf since November 2002. Though first established as a part of Operation Iraqi Freedom, the Coast Guard presence was made permanent in 2004. This force conducts maritime patrols and is responsible for oil platform security in the Persian Gulf.

For more information: Armed Forces in the Region

Is it reasonable for American strategic planners to assume that Iranian decision-makers rationally calculate their country's best policy choices to achieve their goals, or should Americans assume that Iran's actions are unpredictable?

Iran's government structure is a combination of formal and informal power structures. The formal power structures are delineated by the constitution, with various branches and institutions checking and balancing each other. Religious and political organizations, revolutionary foundations, and paramilitary organizations interweave to create a powerful informal power structure that is dominated by clerical patriarchs. This duality of power is seen throughout the structure of the Iranian government.

This duality can lead to institutional tensions and a high degree of incoherence and confusion. Often one institution within the same branch will contradict another or the entire government can be contradicted by organizations in the informal power structure. However, Iran's national security decision-making is historically characterized by a strong culture of consensus-building among relevant individuals and institutions. The desire for consensus leads to a "slow and deliberate" process that discourages rogue operations. Nevertheless, it is often difficult for the government to create a coherent policy, leading to "mixed signals."

For more information: Iranian Political Structure

Why is the Iran-Iraq War sometimes referred to as the Tanker War?

During the Iran-Iraq War (1980-1988), both Iran and Iraq attacked commercial shipping. These anti-shipping campaigns are known as the Tanker War.

For more information: The Tanker War

Why is Persian Gulf sometimes referred as the Arabian Gulf?

The region has historically been known as the Persian Gulf, named after the Persian Empire (present-day Iran). However, the growing Arab nationalism in the 1960s highlighted the ethnic difference between Persians and Arab. Furthermore, evolving Western political and economic interests have prompted an increasing use of the term "Arabian Gulf" when referring to the region.

For more information: About the Persian / Arabian Gulf

Commercial Issues:

How much does the world's economy depend on the flow of oil through the Strait of Hormuz?

The Persian Gulf countries export approximately 18.2 million barrels of oil per day. Of that, approximately 17 million barrels transit through the Strait of Hormuz in tankers each day. Therefore almost one third of the world's oil exports leave the Persian Gulf in tankers. Additionally, over 3.5 billion cubic feet of natural gas, approximately 18 percent of world shipments, travel through the Strait. There are few alternate routes for exporting Persian Gulf oil and gas, making the Strait of Hormuz a strategic chokepoint.

For more information: About The Strait, Oil in the Persian Gulf

Could attacks on oil tankers disrupt the flow of oil by raising the cost of insurance, even if the attacks themselves failed to physically stop the flow of tankers?

First of all, considering that VLCCs each carry around two million barrels of oil, amortizing the additional war risk premium across the vessel's cargo would produce a very small change in the overall cost of supplying oil to world markets. An incremental increase in the war risk premium of two percent would average out to roughly $1.20 per barrel, a small fraction of the current price oil, which is approximately $100 per barrel. One leading private insurer of VLCCs described commercial shipping as an "economist's dream," as "there will always be people willing to transit the Strait for the right price." Secondly, at no time during the Tanker War did insurance rates rise to the point where shippers chose not to purchase insurance. Experts at Lloyd's Marine Intelligence Unit (MIU) do not recall any instances of shipping companies deciding against attempting transits due to high insurance rates. For these reasons, it is highly unlikely that insurance rates will rise enough to stop the transit of tankers.

For more information: Effects of Disruption, Insurance Market

Could Persian Gulf oil suppliers export their oil through a different route if the Strait of Hormuz were closed?

The Strait of Hormuz is the only way to exit the Persian Gulf via water, so pipelines are the only other way for oil transport in the region. Existing pipeline capacity is limited, and many pipelines are in need of repair, upgrades or are closed due to political, economic, or geopolitical issues in the area.

For more information: Alternate Export Routes

Does an effort to disrupt oil flow through the Strait of Hormuz need to hit tankers?

Given Iran's limited weapons arsenal, they would not waste their resources to target anything that would not significantly impact the energy market. Targeting container ships or sea vessels would not produce the desired effect, as they are of little tactical importance. Therefore, in order to create a shock, large oil tankers would make the best target. Attacking tankers will affect the oil markets most drastically and create chaos and panic in the in the worldwide oil market.

For more information: Tankers

Is there enough world slack capacity to compensate for stopped Strait of Hormuz throughput?

Yes, the International Energy Agency (IEA) requires that each member country maintain stockpiles of oil to account for ninety days of import consumption (either through government control or mandate). Based on government estimates, globally reported public and private oil stockpiles stood at nearly 4.2 billion barrels as of July 2007, including the 700 million barrel U.S. Strategic Petroleum Reserve (SPR). If the Strait was partially blocked, resulting in a stoppage of almost 9 million barrels per day, in theory there is certainly enough in public stockpiles to make up for this loss. However, the U.S. SPR, by far the largest single stockpile, can only release a maximum of 4.4 million barrels per day. Furthermore, because there is very little historical precedent in actually using the SPR or initiating a "coordinated" drawdown of oil among the IEA-participating countries, it is unclear how useful these vast stockpiles would be in the event of a Strait closure.

For more information: Slack in the Global Oil Market

Tankers

How vulnerable is an oil tanker to military attacks?

Oil tankers are not as vulnerable to damage as is commonly perceived. Their compartmentalized design makes them extremely difficult to sink. Also, because tankers are filled with an inert substance, crude oil, it is difficult for tankers to catch fire. Furthermore, oil is also a buoyant substance, which would help keep the tanker afloat when damaged. To increase the probability of sinking a tanker or causing it to be a constructive total loss (CTL), Iran would have to damage a specific part of the tanker such as the engine room or the tanker's electronic controls. Because tankers are difficult to damage, only 23 percent of the tankers attacked during the Iran-Iraq War were actually sunk or damaged beyond economic repair.

For more information: Oil Tanker Security, Design & Safety

How much oil does a tanker hold?

There are six categories of tanker, Medium range, Panamax, Aframax, Suezmax, very large crude carriers (VLCCs), and ultra large crude carriers (ULCCs). Each tanker category has different capacity to hold oil. VLCCs, or supertankers, have the capacity of over 200,000 DWT and can carry 2 million barrels of oil. ULCCs can carry in excess of 320,000 DWT or about three million barrels of oil.

For more information: Types of Tankers

What are the key characteristics of the tanker market?

The tanker market is highly fragmented, with over 80 percent of the world fleet owned by independent tanker companies. The ten largest of these independent tanker companies own 26 percent of the world fleet. Many private and state oil companies maintain their own fleets, owning in total 11 percent of the world's tankers.

For more information: Market for Tankers

What are the characteristics of a tanker crew?

A typical VLCC crew, sailing on a tanker in international service, consists of 21-25 personnel. They are normally divided into three departments: deck, engine, and stewards. The deck department is responsible for the safe navigation, cargo handling, in-port operations and exterior maintenance of the vessel. The engine department focuses on machinery operation and upkeep, fuel and lube processing. The stewards department is responsible for feeding, sanitation, interior house keeping and provision/store inventories.

International tanker operators frequently procure crews and traditional seagoing nations and more recently, from less traditional nations (Panama, India, Nigeria, Philippines, Eastern Europe, Russia etc). They seek a combination of quality and efficiency (cost) in their crewing demands. Seamen are licensed or documented by their flag, or home country, although generally they all meet some level of international basic standards for training, certification, experience and background checks. However, internal U.S. domestic trades seamen must be U.S. Citizens. Many countries have similar regulations for their own internal national trade.

For more information: Tankers

What does it cost to schedule an oil tanker?

Tankers are the most economically efficient means of intercontinental transport, as they maximize economies of scale based on volume per voyage. Numerous factors contribute to the cost of a tanker voyage. Fuel is the largest component of a ship's operating costs. In 2004, the average cost of fuel for a VLCC was $14,400 per day. Other major operating costs include crew, repair and maintenance, insurance, stores, and administrative costs. Expenditures on crew represent the largest chunk of these non-fuel operating costs (46 percent in 2007).

For more information: Market for Tankers

What percentage of the price of gasoline is spent on transport costs?

Transportation costs make up a small portion of the total price of gasoline: only approximately eight percent of the price per barrel of oil, which translates to only a few cents per gallon of gasoline.

For more information: Market for Tankers

Weapons:

What specific techniques might Iran employ to try to disrupt the oil flow in the Strait of Hormuz?

Iran's limited assets, the logistical difficulties in achieving a sustained disruption, and the significant U.S. military presence in the Persian Gulf make a prolonged and significant disruption to the global oil market unlikely. However, Iran could achieve an intangible threat by cultivating unwarranted fears. Tanker companies and captains might decide the risk of losing money or lives by transporting oil through the Strait during an Iranian attack would be too great. However, many people believe there will always be those willing to risk their lives for increased profits.

Due to Iran's limited naval and air capabilities, Iran would most likely employ the following weapons in an attempt to prevent passage through the Strait:

  1. Mines: Mines are relatively cheap, easy to deploy and tactically effective. The current geopolitical climate makes mine usage an attractive option for a developing power. As a result, Iran has increased its arsenal of naval mines in recent years. 
  2. Anti-ship Cruise Missiles: Iran reportedly has a moderate amount of ASCMs. ASCMs were the most widely used weapons against oil tankers during the Iran-Iraq War. Moreover, they are low cost, accurate, and stealthy. 
  3. Small Boats: Iran may utilize small boats for suicide missions by loading the small boats with explosives and then intercepting tankers. 

For more information: Weapons

How do modern weapons sink ships?

Generally, sinking a ship requires an explosion, a fire, and/or breaking the hull of the ship. Weapons like bombs, mines, cruise missiles, and torpedoes all can be used to sink a ship. Furthermore, a ship can be damaged to a point where it is considered a constructive total loss (CTL), meaning that the cost of repair is greater than the ship is worth. For example, damaging the electronics of a ship may not cause the ship to sink, but it might cause a CTL. However, all modern oil tankers have double-hulls, inert gas systems, automatic fire-control systems, and sit very low in the water when filled with oil, so they are difficult to damage severely, and they are especially difficult to sink.

For more information: Weapons

This page last modified in August 2008