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Global Energy Transport Security – Analysis

Global Energy Transport Security – Analysis
Jeff D. Colgan and Morgan D. Bazilian August 21, 2019

Global trade in liquefied natural gas sets new records, reshaping international relations and raising transport security concerns

A series of attacks and detentions for oil cargo ships this year have made the Strait of Hormuz a geopolitical hotspot once again, harkening back 35 years to the so-called “tanker wars,” part of the Iran-Iraq War. And while Hormuz’s role as the world’s primary most important oil transit route has not changed, much else about the energy security landscape has – especially growth in liquefied natural gas markets. The concerns around disruptions to oil markets are now salient for natural gas markets as well.

In today’s numbers, an average of more than 20 million barrels pass through the strait daily, about 20 percent of the world’s oil consumption, with 75 percent destined for Asia. And while wars for direct oil conquest are relatively rare, oil is frequently involved in wars in other ways. Research published by the Belfer Center at Harvard University points to complex connections between oil and geopolitical conflict, including resource wars, insulation of aggressive leaders and financing of insurgencies. The report on “Oil, Conflict, and U.S. National Interests” notes: “between one-quarter and one-half of interstate wars since 1973 have been linked to oil.”

The Trump administration’s April decision to re-impose sanctions against Iran’s oil exports, coupled with the Iranian government’s bellicose rhetorical response looms large as the reason for the recent flare-up in the Strait of Hormuz. The UK Navy seized an Iranian tanker off the coast of Gibraltar in July, and subsequently a British-flagged ship was detained by the Iranian Revolutionary Guard in the Strait of Hormuz. After six weeks, Gibraltar allowed the Iranian tanker to leave, despite pressure from the United States to transfer Grace 1, renamed Adrian Darya-1, to its custody. Britain hopes for the release of its tanker, the Stena Impero.