Margin for prudence
Political helmsmanship of the highest order will now be required from the United States - and the Western industrial nations and Japan - if there is any significant disruption of oil shipments through the Strait of Hormuz.
The task for the Western allies is twofold: maintaining the principle of free access through the world's international waterways; but upholding that principle in the most measured way possible so as to avoid enlarging any conflict that might erupt in the strait.
In this regard, there is much to be said for the United States framing its long-range policies for the Strait of Hormuz in careful concert with its allies and other Gulf nations. That would also mean bringing the issue of any shutdown of the strait before the United Nations Security Council. What would seem to be particularly unwise would be any excessive response by the United States taken on its own.
The Strait of Hormuz is the vital passageway that links the Persian Gulf and the Indian Ocean. Through the waterway comes 20 percent of the oil used by the world's noncommunist nations. What needs to be kept in perspective, however, is that it is the European nations and Japan and, to a lesser extent, the other Gulf oil producing nations, that would face the most immediate consequences in the event of any closing of the strait from actions taken by Iran or Iraq.
Europe gets 40 percent of its petroleum supplies through the strait. Japan gets 90 percent of its total oil supplies from the Gulf - much of that via the Strait of Hormuz. The US receives only about 5 percent of its total oil shipments by way of the strait.
Fortunately, the Western nations are far better prepared to handle any major disruption in oil deliveries now than was the case back in the early 1970s, when the Organization of Petroleum Exporting Countries cut off deliveries to the West. World oil supplies are high. A total disruption of the strait would deny the world oil market some 8 million to 9 million barrels per day. But by one analysis - that done recently by Citicorp - some 4 million barrels per day would be available from other world producers. Another 1 to 2 million barrels per day could be replaced by burning other fuels, mainly natural gas. That would mean a daily shortfall of 3 million barrels, which could in part be offset by an increase of Saudi Arabian oil via that nation's pipeline to the Red Sea.
In other words, the Western nations would have some time on their side for carefully calibrated diplomatic moves if the worst were to occur in the strait - such as the refusal of tankers to ply the waters because of a sudden hike in insurance rates following military action by either Iran or Iraq.
