Chapter 1: What role does the Strait of Hormuz play in Iran's oil export strategy?
It only Tuesday and the average price of a gallon of gas in these United States just topped $4. So President Trump is proposing a new strategy to get oil from Iran's Strait of Hormuz for, quote, all of those countries that can't get jet fuel.
Build up some delayed courage, go to the straight, and just take it. You'll have to start learning how to fight for yourself. The USA won't be there to help you anymore, just like you weren't there for us. Iran has been essentially decimated. The hard part is done. Go get your own oil.
But then crude oil prices rose again after an Iranian drone set a Kuwaiti oil tanker on fire. So, yeah. Coming up on Today Explained, how and where and why Iran is winning this war. This is Today Explained. Jerry Doyle, he's the global defense editor at Bloomberg News. Jerry, what's the Strait of Hormuz?
The Strait of Hormuz is this little dogleg of water between Iran and Oman, basically, a little bit of the UAE. And it's important because all of the Persian Gulf countries that produce oil, Iraq, Saudi Arabia, Bahrain, Qatar, the UAE, all use that waterway to get their oil out.
As long as there are no stress factors on the waterway, things such as war or mines, that's just the easiest and cheapest way to do it. The biggest action in the Strait of Hormuz at the moment is that Iran is able to get its oil out through the strait. Meanwhile, U.S. ships and any oil that's been sort of generated in the other Gulf countries is not getting out.
A global energy supply choked off. Where 20% of the world's oil once flowed, hundreds of oil tankers now idle. At least 18 ships have already been attacked in and around the strait, according to the UN.
Foreign Minister Arakshi, thank you so much for your time this morning, sir. Will the Straits of Hormuz remain closed so long as this war continues?
It is only closed to the tankers and ships belonging to our enemies, to those who are attacking us and their allies.
Saudi Arabia has a pipeline running across to the Red Sea that it has been able to pump out something like 7 million barrels per day. But that doesn't come close to hitting the shortfall that has resulted from the Strait being closed.
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Chapter 2: How is Iran leveraging the Strait of Hormuz in the current conflict?
Now, for the rest of the world, the picture is not as great. 20% of the world's oil passes through the Strait of Hormuz. Iran's oil is just a small fraction of that. So they've been able to get their oil out, but it is coming nowhere near making up the shortfall of having the entire Strait closed. And so...
As the global economy tries to absorb the shock of missing that daily supply of oil, you're starting to see it leak into all aspects or many different aspects of the economy. For instance, things like fertilizer, which are heavily reliant on petroleum products and refining, those are starting to become more scarce.
So if things don't change, we'll be paying a lot more for fertilizer.
In just three weeks, the price of nitrogen fertilizer went from $480 to $700 a ton.
So that means things like crop yields could start to become worse. And that, of course, would mean food prices could start to go up. Obviously, oil also, refined oil, petroleum products, diesel fuel, ship fuel, gasoline for your car, those things are also becoming more scarce. The fuel I will need to buy this spring will be in the 30% higher than before the war started.
It used to be 60-something to fill my tank. Now it's 90-something.
And as we use gasoline or diesel fuel to move around a lot of goods within the United States, within Europe, with other countries, other places with large land mass, you're going to start to see the price of those goods go up as well. So losing that supply of oil, we're just starting to see the effects of that.
And I think a lot of economists expect that if it goes on for another month or another two months even, it could really become dramatic.
I would think that if the war ends, Iran says, OK, it's over. The U.S. says, OK, it's over. And then the Strait of Hormuz opens back up. We get back to normal pretty quickly?
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Chapter 3: What measures has Iran taken to control access to the Strait of Hormuz?
They have said they would attack energy infrastructure elsewhere in the Gulf.
So all of U.S.
allies would see their energy infrastructure attacked. They've threatened desalinization plants that Arab allies of the United States rely on in order to have water for their people.
Bahrain's government said an Iranian drone strike damaged a Bahraini desalination plant.
Kuwait says one Indian national has been killed in an attack on a power and water desalination plant. All of this infrastructure is just sitting out in the open and it requires an intense amount of air defense to protect. And that's what we've seen is just the U.S. and its Gulf allies going through enormous amounts of air defense to try and protect these cities and structures and bases.
And if the Iranians were really to go after energy infrastructure in a serious way, it could have global repercussions very, very quickly.
All right. So we actually don't know what the president's plans are with respect to Karg Island. But we are speaking on Monday morning. You and I are. And this morning, Trump posted on Truth Social, the U.S.
will completely obliterate all of their electric generating plants, oil wells and Karg Island.
I mean, that is as that seems like as explicit a threat as one can make. What do you make of what he said there?
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