As Iran allows some ships but not others to travel through the Strait of Hormuz, an important shipping chokepoint, the arrangements amount to what one expert calls a type of geopolitical “ransom.”
The Strait of Hormuz normally sees about 20 per cent of the world’s crude oil supply go through, along with other vital resources. Because the war began, the worth per barrel of oil has spiked worldwide, and economists expect that to drive up inflation very soon, including in Canada.
“Should you allow anyone to dam a global waterway and choose who goes through based on favourable policies or outright ransom, you’ll at all times pay that ransom,” says Aurel Braun, a professor of diplomacy and political science on the University of Toronto.
On Monday, U.S. Treasury Secretary Scott Bessent said that they were aware some ships were getting through in recent days.
“We’re seeing an increasing number of of the fuel ships begin to undergo. The Iranian ships have been getting out already, and we’ve let that occur to produce the remainder of the world. We’ve seen Indian ships exit now … we consider some Chinese ships have gone out,” he told CNBC in an interview.
“That ought to start ramping up before there are any of the flotillas or protective armadas within the Gulf. So we predict that there might be a natural opening that the Iranians are letting out. And for now, we’re superb with that. We wish the world to be well supplied,” Bessent said.
But who advantages and who doesn’t when only certain ships are allowed to go through?
Why block the Strait of Hormuz?
Blocking the Strait of Hormuz could also be one in all Iran’s strongest leverage tools within the war since it allows the nation to do economic damage to other nations, including the U.S. and Israel, by forcing oil prices higher and making virtually all other goods and services dearer.
Oil isn’t just used to make fuel for vehicles, machinery and other equipment: it’s also a critical component in making dozens of other industrial materials, from rubber to plastic, industrial solvents and waxes, and even textiles like fabric for clothing.
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To move absolutely anything requires fuel in some capability, too. Higher oil prices result in dearer fuel, and if it’s more costly to maneuver products to customers and businesses due to those higher fuel costs, then sticker prices often rise too.
Purposely causing economic damage is a component of Iran’s larger pattern of using what’s generally known as asymmetrical warfare.
“They don’t have the standard military power to tackle america and Israel. So what they’ve done is that they’ve engaged asymmetrically in a way, they’ve used their missiles and their drones, their proxy militias in Iraq and in Lebanon,” said Joseph Varner, a senior fellow on the Macdonald-Laurier Institute.
“And, they’ve threatened to mine and shut the Strait of Hormuz, which is sort of really their only real leverage at this point.”
Blocking the Strait has clearly sent ripples through global economies, but Iran is probably not resistant to those negative impacts. This implies countries that may offer Iran something in return may find a way to barter protected passage for his or her ships.
“Some countries will do whatever they’ll to attempt to make it easier,” says Varner. “But Iran doesn’t have the leverage that I feel they think that they do.”
This may increasingly be why Iran is making supposed deals or arrangements with other nations, especially those who rely heavily on oil from the Middle East and Iran particularly.
“China is definitely much more depending on Iranian oil, so it has a really, very large interest to see that Strait be open. Same with India and Pakistan and other countries that were mentioned there. So there’s a robust interest,” says Kevin Budning, director of scientific research on the Conference of Defence Associations Institute.
Varner said Iran’s goal with China is “to maintain the trade open and hopefully get some type of military assistance from the Chinese, whether it’s intelligence or something else.”
Iran has also asked India to release three tankers seized in February as a part of talks in search of the protected passage of Indian‑flagged or India‑certain vessels out of the Gulf via the Strait of Hormuz, three sources with knowledge of the matter told Reuters.
“On Pakistan, Pakistan has threatened Iran that in the event that they proceed to strike Saudi Arabia, that’s an ally of Pakistan, that Pakistan will change into involved within the conflict,” says Varner.
Pakistan was also in a position to get no less than one oil tanker through the Strait over the weekend, data tracking shows.
The Kpler data provider, MarineTraffic, said the Karachi was “the primary non-Iranian cargo to transit the chokepoint while broadcasting its AIS signal, suggesting that select shipments could also be receiving negotiated protected passage” in a post on X.
Budning says if anyone comes out a winner in all of this, it might be other oil-producing countries, like Canada.
“There are at all times winners. So if you happen to are producing oil, if you happen to are within the Canadian oilsands, for instance, and also you’re a big exporter of oil and the worldwide price of oil has gone up and also you’re not particularly affected directly from the conflict within the Middle East, then probably there might be some that can make some serious money out of all of this.”
Although Canada and other oil producers may find a way to assist offset among the oil supply lost from having the Strait of Hormuz blocked, nations that select to barter with Iran to proceed getting oil and other resources from the Gulf region are still taking a significant risk.
“A lot of countries are saying that they’re negotiating with the Iranians to attempt to get protected passage for his or her vessels out and in of the Persian Gulf,” says Varner.
“Making a take care of the devil is rarely an excellent thing. And I don’t think that that’s going to work or help anyone.”
– With files from Reuters
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