Iran begins laying mines in Strait of Hormuz

Iran has reportedly begun laying naval mines in the Strait of Hormuz, threatening to close a waterway through which about a fifth of the world's oil passes, with most volumes having no alternative exit route according to the U.S. Energy Information Administration. President Donald Trump announced the U.S. military destroyed 10 inactive Iranian mine-laying vessels and warned of severe consequences, while deploying at least eight destroyers and three littoral combat ships to the region. Major shipping companies including Maersk, Hapag-Lloyd, CMA-CGM and MSC have suspended operations, leaving about 400 oil and product tankers idle in the Persian Gulf. The U.S. is rolling out a $20 billion reinsurance facility while France leads a multinational initiative to escort tankers, as experts warn a month-long closure could push oil prices into triple digits and natural gas prices to 2022 crisis levels.

Iranian mine-laying operations and U.S. military response

• ▪President Donald Trump announced the U.S. military destroyed 10 inactive Iranian mine-laying vessels

Strategic importance and vulnerability of the Strait of Hormuz

• ▪The Strait of Hormuz is about 21 miles wide at its narrowest point

Economic impact on global shipping and oil markets

• ▪Hakan Kaya said a full or near full closure of the Strait of Hormuz lasting a month or more would push European natural gas prices toward or above the crisis levels seen in 2022
• ▪About 400 oil and product tankers are idle in the Persian Gulf

International efforts to reopen the waterway

• ▪The U.S. reinsurance facility will insure losses up to approximately $20 billion on a rolling basis