Strait of Hormuz: The Oil Artery That Shapes Global Energy Dynamics

The Strait of Hormuz is a strategically critical waterway, facilitating the transit of about 20% of the world's oil trade and a vital component of global energy dynamics. While Iran has repeatedly threatened to close this passage, it remains operational due to the massive strategic and economic costs of actual closure.

Analysts argue that Iran leverages these threats for diplomatic purposes, recognizing the severe consequences of disrupting its own oil exports and regional stability. The oil markets remain buffered by OPEC's spare capacity and US shale production, ensuring stability in supply despite geopolitical tensions.

Even amid threats, market conditions appear resilient, with Brent crude unlikely to sustain significantly high prices without further escalation. Long-term trends and a weak economic recovery in China also contribute to a tempered oil demand outlook, maintaining equilibrium in energy markets.

(With inputs from agencies.)