About the Project
This program, last updated on August 1, 2008, is the product of a Policy Research Project, a year-long graduate course at the Lyndon B. Johnson School of Public Affairs at The University of Texas at Austin. In addition to the background information offered here, the project produced an analytical report estimating the physical, economic, and intangible impacts of attacks on tankers in the Strait of Hormuz. To view an executive summary of the report, click here.
The Robert S. Strauss Center for International Security and Law provided financial support for the project. Professor Eugene Gholz directed a working group of sixteen master's candidates at the LBJ School of Public Affairs: Casey Addis, Katie Brueckman, Anna Cherkasova, Nick Doughty, Shannon Dugan, Jacob Glowacki, Leslie Holmes, Marsha Lewis, John Losinger, Megan Montgomery, Colin Murphy, Crystal Stutes, Zach Walker, Piers Wendlandt, Anne Womer, and Sahar Zubairy. The students made material contributions in gathering and analyzing data, drafting web site content, and writing up the project report.
The Policy Research Project curriculum at the LBJ School enables students to perform interdisciplinary research on a real-world policy issue and helps them develop their research and presentation skills. Project members conducted original research, traveled to places such as London and the Middle East, and spoke with experts in areas such as insurance and military affairs.
About the Strait
Over 90 percent of oil exports from the Persian Gulf pass through the Strait of Hormuz, a vital sea passage only 30 miles wide at its narrowest point. It is commonly believed that a tanker accident, a terrorist attack, or a military effort to close the Strait would send energy prices skyrocketing, threaten ing the global economy. Some scenarios might temporarily interrupt oil flows, while others, such as a major Iranian military attack, might have longer-term consequences.
This website is intended to help assess the threat to oil flows through the Strait. It provides background on the political, economic, business, technical, and military issues involved in potential disruptions. Oil producers, tanker and insurance companies, and regional and global military forces would all react to any attack on Persian Gulf shipping.
Historical and technical perspectives offered here should help readers attain careful, reasoned, responsible views of the severity of the dangers imposed by the world's dependence on the Strait of Hormuz.
Several different industries work together to satisfy global demand for oil, ranging from companies that explore and drill for oil to retailers that sell gas to motorists. Each would react in its own way to a disruption in the Strait of Hormuz. When business conditions change, firms don't surrender. They adapt.
Companies that pump oil out of the ground around the world (producers), transport oil in ships from producers to consumers (tanker owners), and indemnify the oil trade against in-transit losses (maritime insurers) would face the most immediate need to adapt to attacks on shipping in the Strait of Hormuz. To understand how a disruption would affect the global economy " and how big a disruption would need to be to threaten global prosperity " we need to understand how the market works in each of these industries.
Tankers carry over 40 million barrels of crude oil per day worldwide, or about two thirds of the world's oil trade.[i] Tankers are a flexible, cost-effective means of transporting oil to areas of highest demand. The largest of these vessels are over 1,000 feet long and can carry well over 2 million barrels of oil. Because of their enormous scale and the fact that so many travel through the narrow chokepoint of the Strait each day, these supertankers would certainly make attractive targets in any attempt to materially reduce the flow of oil to the global market.