For decades, Iran has relied on the Strait of Hormuz as its most effective geopolitical weapon — a crucial energy chokepoint through which up to a third of the world’s oil is transported and about a fifth of its liquefied natural gas (LNG). Tehran’s immediate blockade of the transit route at the onset of the 28 February U.S./Israeli joint military operation against Iran prompted a cessation of maritime traffic through the chokepoint, catalysing a spike in oil prices of over 70%. The prospect of such a blockade continuing into the U.S.’s 3 November Mid-Term Elections was the decisive factor behind President Donald Trump’s willingness to forge a peace deal, at least in the short term. This is because there is a direct link between the oil price, the price of gasoline, U.S. economic growth, and the success of incumbent presidents and their parties in elections, as fully analysed in my latest book on the new global oil market order. Understandably, according to several senior energy security sources in London. Trump is fully in favour of medium- and long-term methods to circumvent the effectively Iran-controlled Strait of Hormuz, particularly given the relative ineffectiveness of the short-term measures available once Tehran’s blockade was in place. The ‘Southern Highway’ corridor that hugged the coast of Oman and was actively backed by U.S. and Gulf allies proved slightly more effective at reducing market panic than it was at restoring the number of oil tankers in transit. During peak operations early in the blockade, the corridor allowed roughly a dozen vessels per weekend to transit, rising to around 119 ships by late June — still a long way off the historical 700 weekly transits normal for the waterway. Similarly taking the edge off market panic but still representing a fraction of what was required over the medium- and long-term to keep oil prices from spiralling, were the land-based routes for trucks carrying oil through Iraq and Syria. Iraq’s case is instructive, as it managed to move around 500 trucks on average a day into Syria at the height of the blockade, with each one carrying around 250 barrels of crude oil — totalling 125,000 barrels per day (bpd). That compared to the previous 3.3-3.4 million bpd it moved through the Strait of Hormuz before the blockade. More significant options were also used alongside these makeshift measures, with one being the capacity expansion of Saudi Arabia’s East-West Pipeline (1,200 km long, moving crude from eastern oil fields across the Arabian Peninsula to the Red Sea port of Yanbu) to 7 million bpd for a while. However, Yanbu’s marine terminal and domestic refining create a bottleneck, capping actual export throughput at around 4.5 million bpd. Another option was the UAE’s Habshan–Fujairah Pipeline (360 km long, linking Abu Dhabi’s fields directly to the port of Fujairah on the Gulf of Oman), which has seen capacity increase to its maximum level of 1.8 million bpd. At the same time, further support came from increased oil supply from the U.S. and other countries, massive releases of barrels from the strategic petroleum reserves of International Energy Agency member countries, and a massive, multi-year oil supply surplus that acted as critical energy buffers to broader economic fallout when the blockade of the Strait of Hormuz hit. That said, going into the crisis, the U.S. oil industry was already pumping at absolute record highs, providing a vital supply baseline of 13.6 million bpd. Source: oilprice