Why Iran uses the passage of the Strait of Hormuz as a geopolitical ‘ransom’ – National
With Iran allowing some ships but not others to pass through the Strait of Hormuz, an important shipping channel, the arrangements amounted to what one expert called a form of “ransom” for the country.
The Strait of Hormuz typically sees around 20 percent of the world’s crude oil pass through, in addition to other important resources. Since the start of the war, the price of oil per barrel has risen around the world, and economists expect that will soon increase the strength of the currency, including in Canada.
“If you allow anyone to block an international waterway and choose who passes based on favorable policies or specific ransom, you will always pay that penalty,” said Aurel Braun, a. professor of international relations and political science at the University of Toronto.
On Monday, US Treasury Secretary Scott Bessent said they were aware of other ships passing through in recent days.
“We’re seeing more oil tankers starting to leave. Iranian tankers are already leaving, and we’ve allowed that to happen to feed the whole world. We’ve seen Indian tankers leaving now … we believe some Chinese tankers have left,” he told CNBC in an interview.
“That has to start going up before there are flotillas or armadas protecting the Gulf. So we think there will be a natural opening for the Iranians to let go. And at the moment, we are going well with that. We want the world to be well served,” said Bessent.
But who benefits and who doesn’t when only certain ships are allowed to pass?
Why block the Strait of Hormuz?
Blocking the Strait of Hormuz may be one of Iran’s most powerful tools in the war because it allows the nation to inflict economic damage on other nations, including the US and Israel, by forcing oil prices to rise and making almost all other goods and services more expensive.
Oil is not only used to make fuel for cars, machines and other equipment: it is also an important component in making a number of other industrial products, from rubber to plastic, industrial solvents and waxes, and even textiles such as clothing.
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Transporting almost anything requires fuel somewhere, too. Higher oil prices lead to more expensive fuel, and when it costs more to deliver products to customers and businesses because of those higher fuel costs, sticker prices tend to rise as well.
Intentionally causing economic damage is part of Iran’s larger pattern of using what is known as asymmetrical warfare.
“They don’t have the conventional military power to take on the United States and Israel. So what they’ve done is they’ve partnered in a sense, they’ve used their missiles and their drones, their proxy forces in Iraq and Lebanon,” said Joseph Varner, executive director at the Macdonald-Laurier Institute.
“Also, they threatened to mine and close the Strait of Hormuz, which is their only real advantage right now.”
Blocking the Strait has clearly sent shockwaves through the global economy, but Iran may not be immune to those negative effects. This means that countries that can offer Iran something in return can negotiate a safe passage for their ships.
“Other countries will do everything they can to try to make it easier,” said Varner. “But Iran doesn’t have the power that I think it has.”
This may be the reason that Iran makes agreements or plans to be made with other nations, especially those that rely heavily on oil from the Middle East and Iran in particular.
“China is actually very dependent on Iranian oil, so it is very interested to see that the Strait is open. The same with India and Pakistan and other countries mentioned there. So there is a strong interest,” said Kevin Budning, director of scientific research at the Conference of Institutional Defense Organizations.
Varner said Iran’s goal with China “is to keep trade open and hopefully get some kind of military assistance from the Chinese, whether it’s intelligence or otherwise.”
Iran has also asked India to release three tankers seized in February as part of negotiations to allow Indian or Indian-flagged vessels to pass through the Gulf through the Strait of Hormuz, three sources with knowledge of the matter told Reuters.
“In Pakistan, Pakistan has threatened Iran that if it continues to attack Saudi Arabia, which is an ally of Pakistan, that Pakistan will be involved in this conflict,” said Varner.
Pakistan also managed to locate at least one oil tanker in the Strait over the weekend, tracking data shows.
Kpler’s data provider, MarineTraffic, said Karachi was “the first non-Iranian vessel to pass the exit point while broadcasting its AIS signal, suggesting that the selected shipment may have found a negotiated safe haven” in a post on X.
Budning says that if anyone came out successful in all this, it might be other oil producing countries like Canada.
“There are always winners. So if you’re producing oil, if you’re in the Canadian oil sands, for example, and you’re a big oil seller and the price of oil is up and you’re not particularly affected by the conflicts in the Middle East, there’s probably going to be someone who’s going to make a lot of money from all of this.”
Although Canada and other oil producers can help make up for some of the lost oil supplies due to the blockade of the Strait of Hormuz, countries that choose to negotiate with Iran to continue receiving oil and other resources in the Gulf region are still at great risk.
“Many countries say they are negotiating with the Iranians to try to find a safe way for their ships to enter and exit the Persian Gulf,” Varner said.
“Making a deal with the devil is never a good thing. And I don’t think that’s going to work or help anyone.”
– With files from Reuters
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