Geopolitical Importance of the Strait of Hormuz

The Strait of Hormuz, at its narrowest point, is less than 40 kilometers wide and is a critical shipping corridor for oil and gas. Its significance is highlighted by the fact that over 100 ships pass through it, carrying goods worth hundreds of millions of dollars. However, it is not the busiest strait when compared to the Strait of Gibraltar, the Strait of Dover, or the Strait of Malacca, the latter of which sees almost 30% of global trade.

Impact of Closure by Iran

The recent closure by Iran has led to global economic repercussions, with significant effects on countries dependent on the strait for trade:

• In India, concerns have arisen about the price and availability of cooking gas.
• Potential scarcity of fertilizers due to reduced supply of ammonia and urea.
• Polyester manufacturers in India face challenges as almost all ethylene glycol is sourced through Hormuz.
• The steel industry is affected as four-fifths of India's limestone flux imports are from Mina Saqr, near Hormuz.
• Sulphuric acid supply, crucial for chemical processing, is impacted.

Historical Context of Control Over Strategic Waterways

Throughout history, control over critical waterways has been a source of power and wealth. The Portuguese empire in the 16th century built its eastern empire by controlling strategic locations like Malacca, Aden, and Hormuz. These locations used toll systems to generate revenue, a practice that continues in some form today.

Global Norms and Economic Implications

The closure of such waterways challenges the norms of free navigation that have supported global trade and prosperity. This has been a unique privilege of the past century, facilitating the interconnected global economy and raising living standards.

Strategic Considerations and Future Outlook

Countries like Japan have emphasized the importance of a "free and open Indo-Pacific" to safeguard against similar disruptions. Negotiating tolls with controlling powers like Iran or the US might seem practical during crises but is seen as a short-term solution.

• Singapore highlights the importance of maintaining the principle of transit passage per the law of the sea, crucial for its economic survival.
• The potential breakdown of the post-War order could disrupt the principles that have enabled trade and development.

The document concludes by emphasizing the need to uphold norms that ensure a predictable global order supporting economic prosperity.