Is Iran Laying Mines In Strait Of Hormuz? How It Threatens World's Energy Lifeline | 5 Points

US military "eliminated" 16 Iranian mine-laying vessels near the Strait of Hormuz on Tuesday, the US Central Command said in a statement, as US President Donald Trump warned that any mines laid in the Strait by Iran must be removed immediately. Trump previously said the US had "completely destroyed" 10 inactive mine-laying vessels.

In apparent response to media reports that Iran had begun laying mines in the waterway- a key passage for oil shipments- Trump posted on Truth Social: "If Iran has put out any mines in the Hormuz Strait, and we have no reports of them doing so, we want them removed, IMMEDIATELY!" He said that if Tehran did not do so it would face military consequences, without providing details.

Trump also said the US was using the same technology deployed against drug traffickers to "permanently eliminate any boat or ship attempting to mine the Hormuz Strait." In recent months, the US has carried out a series of strikes on vessels in the Caribbean and eastern Pacific that it alleges were carrying drugs, killing dozens of people.

The Pentagon said earlier on Tuesday that it was striking Iranian mine-laying vessels and mine storage facilities. The US-Israel war against Iran has already effectively halted shipments through the Strait of Hormuz, along Iran's coast, where a fifth of global oil and liquefied natural gas normally passes.

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What could be impact of Iranian seamines in Hormuz?

1. Major oil supply disruption: The Strait carries about 20 million barrels of oil daily, nearly 20 per cent of global supply. Mines could furhter halt tanker movement and cut global oil availability.

2. More oil price spike: Even partial disruption can push crude prices sharply higher as markets fear supply shortages.

3. LNG and gas trade hit: Around one-fifth of global LNG exports also pass through Hormuz, meaning gas supplies to Asia and Europe could tighten.

4. Tanker traffic and insurance collapse: Sea mines make shipping extremely risky, forcing ships to stop or reroute and causing war-risk insurance and freight costs to surge.

5. Asian economies most vulnerable: Countries like India, China, Japan, and South Korea receive most Gulf oil through this route, exposing them to fuel shortages and inflation.

6. Global economic shock risk: Energy disruptions can raise transport, manufacturing, and food costs worldwide, potentially slowing global growth

Crude oil prices skyrocketed

Notably, the prices of crude oil skyrocketed in the recent weeks after Iran blocked the Hormuz region. Oil prices seesawed on Wednesday after the Wall Street Journal reported the International Energy Agency has proposed the largest release of oil reserves in its history to offset supply disruptions stemming from the war on Iran. Brent futures traded up 11 cents, or 0.13 per cent higher, at USD 87.91 a barrel at 0129 GMT.

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The IEA's proposed drawdown would exceed the 182 million barrels of oil that IEA member countries put onto the market in two releases in 2022 when Russia launched its full-scale invasion of Ukraine, the WSJ said, citing officials familiar with the matter.

(With inputs from Reuters)