Possible Hormuz blockade threatens Asia’s energy lifeline, unsettling oil market

[SINGAPORE] Oil and liquified natural gas (LNG) buyers in Asia have been unsettled by the Iranian parliament greenlighting a plan to close the Strait of Hormuz. The sea passage between the Persian Gulf and the Gulf of Oman is a critical choke point through which passes more than 20 per cent of global oil and LNG supplies – a majority of which are bound for Asian markets.

While a full blockade is unlikely given how it would directly undermine Iran’s own interest, even marginal disruptions could spike insurance costs and force Asia to confront its reliance on the choke point.

Oil price spikes would also put pressure on regional central banks that are on track to cut interest rates to spur growth, warned market watchers.