Reminder: World Oil Chokepoints Remain Vulnerable

In the first few days of 2008, the price of oil passed $100 a barrel on its way to a high of $147—resulting in record prices at the pumps and a feverish demand for smaller fuel-efficient cars such as hybrids. The global downturn in the economy in the second half of the year simultaneously cut oil prices by $100, and sliced interest in hybrids and other energy-saving alternatives. Americans drove 100 billion fewer miles during the 12-month period between November 2007 and October 2008 compared with the previous year, according to the US Department of Transportation.

In a case of déjà vu, oil prices climbed 23 percent last week, the first few days of 2009.

While most forecasters expect oil to remain in the $50 to $60 range for 2009, the world’s oil supply is no less vulnerable—and perhaps even more susceptible—to geopolitical forces than it was before the financial meltdown. Last week’s upturn in oil prices were attributed to Israeli attacks in Gaza, a natural gas dispute between Russia and Ukraine, and OPEC’s announced production cuts.

Vulnerabilities are most prevalent in the world’s six major oil transit chokepoints—where the threat of terrorist attack, theft from pirates, political unrest, and shipping accidents post real dangers. More than 40 billion barrels of oil are shipped every day along these narrow channels. A single incident in one of these locations could immediately wake American consumers up from the current lull in prices—and disrupt a sense of complacency about the real costs of filling up our cars and trucks.

Strait of Hormuz

Strait of Hormuz
Strait of Hormuz Map

The Strait of Hormuz is by far the world’s most important chokepoint with an oil flow of 16 to 17 million barrels per day—roughly 20 percent of oil traded worldwide. At its narrowest point the Strait is 21 miles wide, and the shipping lanes consist of two-mile-wide channels. The majority of oil exported through the Strait of Hormuz travels to Asia, the United States and Western Europe. On average, 15 crude oil tankers pass through the Strait of Hormuz every day.

The Strait of Malacca

The Strait of Malacca, linking the Indian and Pacific Oceans, is the shortest sea route between the Middle East and growing Asian markets. At its narrowest point, Malacca is only 1.7 miles wide, creating a natural bottleneck—as well as potential for collisions, grounding, or oil spills. Recent reports by the International Chamber of Commerce show that piracy, including attempted theft and hijackings, is a constant threat to tankers in the Strait of Malacca.

The Suez Canal

The Suez Canal is located in Egypt, and connects the Red Sea and Gulf of Suez with the Mediterranean Sea. Oil shipments from the Persian Gulf travel through the Canal primarily to European ports, but also to the United States. More than 3,000 oil tankers pass through the Suez Canal annually. Rampant piracy off Somalia’s coast has recently hit revenues at the Suez Canal. Shippers are avoiding the canal following the capture by Somali pirates of a Saudi Arabian supertanker loaded with $100 million worth of oil in November 2008.

The Strait of Bab el-Mandab

The Strait of Bab el-Mandab

The Strait of Bab el-Mandab is a chokepoint between the horn of Africa and the Middle East, and a strategic link between the Mediterranean Sea and Indian Ocean. It is located between Yemen, Djibouti, and Eritrea, and connects the Red Sea with the Gulf of Aden and the Arabian Sea. In 2006, an estimated 3.3 million barrels per day flowed through this waterway toward Europe, the United States, and Asia. The Strait is 18 miles wide at its narrowest point, with two 2-mile-wide channels for inbound and outbound shipments. Bab el-Mandeb was the site for of a naval blockade of Israel by Egypt in the 1973 Yom Kippur War.

The Turkish Straits

The Turkish Straits

The Bosporus Strait is one of the busiest and most dangerous chokepoints in the world. The 17-mile long waterway located in Turkey supplies Western and Southern Europe with oil from the Caspian Sea Region. In 2006, an estimated 2.4 million barrels per day of mostly crude oil flowed southbound through this passageway. Only half a mile wide at its narrowest point, the Turkish Strait is one of the world’s most difficult waterways to navigate due to its sinuous geography. With 50,000 vessels, including 5,500 oil tankers, passing through the straits annually it is also one of the world’s busiest oil routes.

The Panama Canal

The Panama Canal

The Panama Canal is an important route connecting the Pacific Ocean with the Caribbean Sea and Atlantic Ocean. A half-million barrels per day of crude and petroleum products were transported through the canal in 2006. The Canal is 50 miles long, and only 110 feet wide at its narrowest point, called the Culebra Cut. The Panama Canal is not a significant route for US petroleum imports, but like all important thoroughfares, closure of the Panama Canal would greatly increase transit times and costs adding over 8,000 miles of travel.

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  • Bryce

    The Panama Canal actually is on schedule to be updated by the Panamanian government to bring up to normal ship size standards. The Strait of Bab el-Mandab is actually largely protected by American military posts in Djibouti. Turkey is a NATO ally which takes care of that. We basically let the Egyptians have the suez canal from the British and French. Thailand and the American troops there wouldn’t let too much bad stuff go down in the straights by Indonesia. The only real problem is the one threatened by Iran which, besides the Navy, has no real bulwark against blockage. And, as mentioned by this article, that is the one that the most oil passes though of these. If there is one good thing about Iraq and Afghanistan, it is that Iran is surrounded which I am sure makes them a little nervous.

  • Samie

    I have always wondered just how much money is spent on protecting oil interests. I have read economic studies that estimated true costs (w/ other negative externalities) is anywhere from about 0.30 to few bucks extra per gallon added on to the market costs but these estimates may be unclear due to not knowing actual costs or varying factors that go into these studies. Anyways I’m sure our cost of petroleum by no means reflects true costs of military support, diplomatic works, or subsidies. Another problem I don’t understand is some countries that export oil don’t bother making a serous attempt to invest in their own citizens which creates social instability and aids some forms of radical extremist.

    Also how would any other fuel be different then oil? CNG, biofuels, current extraction of hydrogen, new productions of ethanol??? Same conditions would happen so I’m not sure it is a sound argument to just be worried about trying to reduce oil with other fuels. Improvements in battery technology and decentralized energy inputs seems to be a better investment than current short-term schemes and getting bent over about uses of petroleum.

  • Bryce

    Samie… your question on why countries with vast oil reserves and high revenues from them do not try to advance the lives of their own citizens through economic development…..

    The answer is 2 fold:

    1. The governments revenue, for those countries whose revenues come 90% from oil, which include most states in the middle East, Venezuela, Nigeria, and a few others behave in the same way all states around the world do. They play to interests of their revenue base. Throughout the western world, their revenue base is people, so their are many social programs and the development of infrastructure and whatnot. In these oil dependent governments, their revenue base is oil, so they put all their money into maintaining that largely ignoring the populous simply because they don’t need them to run an effective administration. The money not used for this development, and sometimes their own personal enrishment goes into answer 2….

    2. The rest of the money is essentially used to buy off the citizenry. In large part, most of these governments are dictatorial and not greatly developed leaving a poor angry populous. The rest of the money is used to either directly pay off people or subsidize commodities like oil and food. The problem with this is of course that when oil prices go down, there is less revenue for the state to put into paying people off and subsidies…..which eventually leads angry people used to their cheap stuff and free monthly pay checks to riot.

    I hope that answers atleast some of your question.

  • rgw1946

    Strait of Hormuz>>gather Iran is to hold exercises to close it down…Ummm…think we need to send (2) sub’s and carrier and practise making GLASS from Iran’s sand..

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  • susan ford

    this is pretty