strait of hormuz news for traders
The Strait of Hormuz is a narrow waterway between the shores of Iran , UAE and Jordan.
Although Iran did not create the Strait of Hormuz artificially (it is not like the Suez Canal), International Law allows Iran claim control of the Strait because of its proximity to Iranian shores.
the Strait of Hormuz is around 330 feet deep which is good for cargo ships carrying oil from major oil producers in the Persian Gulf. The Strait of Hormuz is the shortest means of transporting oil to the Indian ocean.
U.S. President Donald Trump is trying to get countries to form a security force to stop Iran from attacking Oil Vessels passing through the Strait of Hormuz.
This is President Trumps Truth Social Post informing the public that other countries will join forces to secure the Strait of Hormuz.
Trump Bombs Iran's Kharg Island
Over the weekend, US President Donald Trump announced on his Truth Social handle, that the US military had attacked and bombed Kharg Island in Iran.
What is Kharg Island?
To give you some context, even though Iran is sabotaging oil shipment through the Hormus Strait, it is actively selling oil to Russia etc. in order to fund it war against the USA. The Kharg Island is where its oil loading terminals are situated. Iranian oil is stored on Kharg Island and shipping vessels come there to load oil for onward sale.
Khard Island remains the Iran's main gateway to global energy markets.
Trump Bombs Iran's Kharg Island
Over the weekend, US President Donald Trump announced on his Truth Social handle, that the US military had attacked and bombed Kharg Island in Iran.
Oil prices will definitely rise again, but this is a necessary move to handicap Iran's ability to fund its war. Other countries need to stop sitting on the fence and wrap this war up asap. The UK especially should get involved.
Why Other Countries Are Reluctant To Join Forces with the US to Protect Hormus Strait
1. No Appetite For War
Europe is already feeling the effect of the Russia-Ukraine war and most European allies are not ready to witness another war. Most European countries/allies would rather spend their resources fighting Russia to liberate Ukraine.
2. No Insurance Company Wants To Insure Oil Vessels Passing Through The Gulf
The lack of insurance coverage, means any losses during war will not be reimbursed. This means the countries will fully bear any losses inflicted on them during the war.
3. Even If Oiil-Laden Ships Move In a Convoy Their Speed Will be Limited
Some experts have suggested oil-carrying ships move in a convoy which would be escorted by allied forces miliitary but not all ships have the same speed capacity. This means the convoy speed will depend on the speed of the slowest ship.
4. Mined Waters & Signal Jammers
Iran has planted mines/bombs in the waters of the Hormus Strait making it very dangerous for oil-vessels. Iran is also actively jamming electronic signals that these ships need to navigate speedily and successfully.
