The Threat to the Oil Flow

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The optimism about coping without Iraq's and Iran's wells does not, of course, extend to the remote but horrific possibility that the Strait of Hormuz might be closed to navigation if the level of hostilities escalates. The late Shah once called the 36-mile-wide strait at the southeastern end of the gulf "the West's jugular vein." With oil from the major Middle East producing nations being carried through the strait, supertankers frequently pass the "horn" of Oman on their way to Japan, Western Europe and the U.S. This procession of behemoths carries about 40% of the non-Communist world's total oil supply. If that should be choked off, the industrial nations would face a catastrophic oil shortage and global crisis.

A closing of the strait would immediately halt the vital flow of 17 million bbl. of oil a day now coming out of Saudi Ara bia, Kuwait and the gulfs other major producers. Although the 100 days of oil stocks seem to offer protection, some petroleum experts believe that this provides a misleading sense of security. They point out that 76 days of supply are normally in transit and refineries. Use these up, they warn, and a comparable period will be required to bring renewed supplies to mar ket. The same goes for the 15 days worth of strategic stockpiles maintained by the U.S. and other governments.

Compared with nations like France and Japan, the U.S. seems, in theory, less vulnerable to gulf oil cuts. It gets less than 30% of its oil from the region, vs. 60% for the other two. But, in fact, the repercussions would be worldwide. Under the terms of the International Energy Agency pact drawn up last May, the U.S. and 20 other industrialized nations agreed to share any future oil shortfall. Excess U.S. supply would go toward helping worse-off nations. The hardships too, presumably, would be common to all: scarce heating oil, gas lines, rationing and possibly punishing new taxes to curb demand. "Nothing remotely like that has ever happened," says Oil Expert John Lichtblau of a possible blockade of the strait: "It's like asking what would happen if an atom bomb fell on New York." Adds fellow Expert Daniel Yergin: "The situation is so uncertain, we should operate on the assumption that the worst will happen."

It would not be easy to close the Hormuz Strait, at least not directly. Unlike the Suez and Panama canals, the navigable, 26-mile-long tanker channel is an average of seven miles wide and 216 ft. deep. A fully laden, 500,000-ton giant tanker would be able to circumvent or even sail right over a deliberately sunk vessel. However, it would not be difficult to bring the oil traffic to a halt indirectly. All it would take is an attack against a tanker by a plane or patrol boat. Even if it missed, that might be enough to scare off navigation and thus establish an effective blockade by deterrence.

Fortunately and somewhat surprisingly, the furious fighting of the opening days of the war had scant effect on traffic through the strait. True, Lloyd's of London continued to issue insurance policies only at premiums that were 300% higher than before the war. Many cautious captains chose to lie at anchor at a safe dis tance and wait for more peaceful passage. Nevertheless, some 600 ships were sailing successfully, if gingerly, in the gulf. As yet, none on the high seas had been bombed, strafed or sunk.