The Strait of Hormuz
The world runs on oil but right now the world’s biggest oil shortcut is a war zone.
The Big Story
The Strait of Hormuz carries about 20% of the world’s oil every day. Since late February, Iran has blocked most ships after the U.S. and Israel launched airstrikes.
A ceasefire was signed in June, but both sides traded new strikes this weekend, putting the agreement at risk.
The Two Spins
From the Left
Bringing in more international partners could have led to a faster, more stable resolution.
Strikes since the ceasefire show the risks of acting without a broader diplomatic plan.
From the Right
Iran closed an international waterway and attacked ships, making a military response necessary.
Without a firm response, Iran had no reason to stop attacking ships or reopen the waterway.
What This Means for Us
When the Strait of Hormuz is disrupted, our everyday costs go up.
We feel it at the gas pump first. Then at the grocery store. Pretty much anything that gets shipped costs more when oil is expensive. Prices started coming down, but with fighting picking back up this weekend, this relief may not last.
How They Make Money
Cheniere Energy
Cheniere exported about 45 million tons of liquefied natural gas (LNG) last year, making it the largest LNG exporter in the world.
After the strait closed, Cheniere set a record of 187 cargo shipments in a single quarter and raised its full year earnings forecast to roughly $7.75 billion.
Takeaway
When Middle East energy is disrupted, American exporters are often first in line to fill the gap.
The Number That Stuck With Me
99%
LNG shipments through the strait dropped 99%, removing about 20% of the world’s supply almost overnight.
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