Renewed tension in the Strait of Hormuz forced the United States to set up an international maritime security alliance to guarantee the safe passage of ships and to protect against the further interruption of oil supplies. While in the past such security coalitions have been successful, applying the same Middle East approach may not improve the conditions and might even exacerbate tensions.
The Hormuz Strait is the main shipping route for one-sixth of global oil supply and one-third of the liquefied natural gas worldwide. Two international shipping ships were struck on June 13 when they entered the Strait of Hormuz off Iran’s coast. The U.S. was quick to accuse Iran of the attacks and provided compelling evidence. A variety of other naval events preceded the attack, which exacerbated relations between the U.S. and Iran.
The primary concern for the global shipping sector in recent years has been about risks to Red Sea ships transiting the Bab Al-Mandeb as a consequence of the Yemen war. Houthi activists supported by Iran claimed responsibility for several shipping vessel attacks including an attack in July 2018 on two Saudi oil tankers. That incident led officials from Saudi Aramco to suspend all shipments of oil through the Bab al-Mandeb. While the Saudi restored oil shipments in the Red Sea, Iranians and Houthis continued to target Saudi Arabia’s resources in the area, most notably with a drone attack on Saudi oil installations which cut production in the world by 50%.
Given Iran’s recent incidents and threats of shutting down the Hormuz Strait for global oil trade, there has been no resulting increase in oil prices other than a short-term blip. However, there have been dramatic changes in other parts of the capital/risk calculus. According to industry representatives, insurance rates for ships transiting the Strait of Hormuz have already increased tenfold. War hazard premiums–charged every time a vessel reaches the area–have increased from $30,000 in early 2019 to $300,000 at current rates. Oil and gas shipping rates have also increased as the dispute and subsequent U.S. restrictions force oil and gas companies to pay record amounts to move their material.
The United States has been working to establish a collaborative maritime security operation to address maritime insecurity in the Gulf region. The international coalition’s performance in addressing the piracy problem off the Somali Coast erupted in 2010 has been quoted as a precedent.
While this international collaboration has been a success, for the most part, Hormuz poses other challenges. Four main differences between 2010 and current coalitions include:
Geography: In the Indian Ocean off Somalia’s coast, shipping vessels transit the coast relatively farther from the territorial waters, reaching 12 nautical miles off the coast. This is relevant as the territorial definition of 12 nautical miles of water is defined in the Sea Law Convention of the United Nations. Since many of the attacks took place beyond territorial waters, deep in the Arab Sea and the Indian Ocean, the international community did not violate Somalia’s territorial waters when it launched its efforts.
By comparison, the waterway in the Strait of Hormuz is 21 nautical miles at its narrowest point, implying that operations in the Strait of Hormuz may exist in Iran’s or the UAE or Oman’s territorial waters.