Why is unblocking the Straight of Hormuz so important economically to the US if only 2.5% of its oil come from there and it’s a net exporter of oil?
Why is unblocking the Straight of Hormuz so important economically to the US if only 2.5% of its oil come from there and it's a net exporter of oil?
byu/-Sliced- inAskEconomics
Posted by -Sliced-
2 Comments
I don’t know what you mean by “so important” but,
1. the U.S. is not a net exporter of oil but instead a net exporter of “oil and oil products”. We import oil and export diesel, gasoline, or etc.
2. It is a global market. Now that the Europeans aren’t able to get arab and persian oil they are looking to buy oil that would normally come to the United States. Additionally the lengthening of global trade routes will increase the rates you have to pay for oil tankers increasing spreads and end costs for delivered oils.
What matters is global supply and global demand. Global supply shrinking will lead to global price increases even for places that aren’t individually effected by the closure because places that were buying oil that had passed through the Strait are still buying oil, but from elsewhere.
Oil isn’t quite to the [Law of One Price](https://en.wikipedia.org/wiki/Law_of_one_price) (among other things, oil comes in different varieties that are processed differently), but it’s useful to keep it in mind when looking at global commodity markets