The Siege of the Strait of Hormuz...

 

The Siege of the Strait of Hormuz...

We are witnessing a new chapter in the Gulf crisis. American forces have begun preventing Iranian ships from passing through the Strait of Hormuz, while allowing ships from other Gulf states to do so. Whatever Iran's reaction to this American action, it's clear that Iran will not be deprived of exporting 2 million barrels per day, as it has alternative solutions to address this problem. However, this figure will decrease significantly, and Iran will be deprived of at least one million barrels per day in exports.

Over time, as the oil accumulates, Iran will be forced to reduce its production and resort to storage, depending on its storage capacity. ...and that there are pipelines for transporting Iranian oil and regional gas, such as the Tabriz-Ankara pipeline for transport to Turkey, and then the Iran-Armenia gas pipeline... However, Iran will be forced to reduce its export figures, and consequently, we are facing a large stockpile over time if the crisis continues for another month... But the Iranian reaction is that Iran will not stand idly by... and the strategy of Iranian politicians is not to surrender or compromise and to pursue a policy of self-destruction... or a policy of dying standing without conceding... Therefore, we are facing a problem that will take a long time... making exports via the Arabian Gulf and then the Strait of Hormuz extremely dangerous and carrying high risks for international shipping companies...

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If we look at the production of the Gulf Cooperation Council (GCC) countries, Saudi Arabia produces 10.5 million barrels per day, followed by the UAE at 3.5 million barrels per day, then Kuwait at 3 million barrels per day, and Qatar at 600,000 barrels per day, with a focus on exporting natural gas more than oil. The GCC countries contribute 20% of the world's oil production, meaning one-fifth of the world's oil production comes from the GCC countries. Tensions in the Strait of Hormuz will affect the oil and gas production and exports of these countries. Saudi Arabia has a pipeline to transport its oil from production sites in the east to export terminals in the west on the Red Sea, with a capacity of 7 million barrels per day. The UAE has the Habshan-Fujairah pipeline, and Fujairah is located beyond the Strait of Hormuz and outside the Arabian Gulf. However, this pipeline has a capacity of 1.8 million barrels per day, which would put the UAE in a difficult position storing one million barrels. With the prolonged crisis, the problem will become even greater due to the lack of available alternatives. Kuwait, which does not have any pipelines, is another example. To export its oil, it has no option but to use ports on the Arabian Gulf. It should study the feasibility of a pipeline to transport its oil to the nearest Saudi port on the Red Sea, taking into account the costs and timeframe for its construction. Given the assumption that the crisis will be resolved sooner or later, it is crucial to study this alternative so that the pipeline is available for any future crisis. Then there is Qatar, which is supposed to have a production pipeline to Fujairah, in partnership with the UAE, with the pipeline's capacity to be increased in agreement with the UAE.

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...and Qatar has a gas pipeline to Abu Dhabi. The existence of another pipeline for transporting oil has become essential. The gas pipeline will also face problems. Tensions are high in the Arabian Gulf. The mere announcement of the blockade on the Strait of Hormuz caused oil prices to surpass $100 a barrel, and they are expected to rise further if the crisis persists. Consequently, stocks have fallen in global markets. This is because the most significant cost element for any company or organization is electricity, which is generated using oil. Furthermore, the cost of transporting the product from its manufacturing sites to its points of sale or consumption will increase. Therefore, observers anticipate a wait-and-see approach, refraining from buying stocks until further developments unfold. Consequently, investors in global stock exchanges are likely to avoid purchasing shares in companies whose operating costs are tied to energy, which is driving down global stock market indices. The economies of the Gulf states are interconnected with many countries in the Middle East, not only through tourism but also through the employment of expatriate workers. Remittances from at least 20 million foreign residents in the Gulf to their families in their home countries represent one of the most important sources of revenue for these nations. Others in the Middle East.