US air strikes on Iran sent oil prices soaring on Monday, leaving Asian shippers burdened with fresh costs on top of extra insurance premiums of US$1 million more per tanker, as Tehran threatened to close the crucial Strait of Hormuz sea lane.
Up to 20 million barrels of oil pass each day through the strait, one-fifth of the global supply, most of it destined for East Asia’s biggest economies – China, South Korea and Japan.
The neck of water is controlled by Iran, whose parliament on Sunday approved the closure of the shipping lane in response to the US joining Israel’s bombardment of the country.
Any closure of the strait will have global ramifications for the Gulf’s oil-producing nations and the export markets of Asia.
Oil spiked to close to US$80 on Monday morning from US$60 a barrel at the beginning of June, with a prolonged rise likely to soon be felt by Asian consumers.
Tunku Mohar Mokhtar, a geopolitical analyst at Malaysia’s International Islamic University, said closing the Strait of Hormuz would affect energy prices and energy supply to the Asian market.
