While understanding that OPEC and non-OPEC oil floods global markets, it is important to note that the Strait of Hormuz is the most important narrow passage for crude oil on the planet. With 21 million barrels of oil per day flowing through this chokepoint, and more importantly being so narrow that a small group of planes in one sortie can close it, it is clear why I talk so much about it. Each month an average of 45 super tankers pass through as they inch past each other, carefully navigating this heavily patrolled waterway. According to the US Energy Information Administration, the EIA, about 35 percent of the water transported (global) crude oil passes through this geopolitical hot spot.
Across Saudi Arabia, and within Gulf the US now has 44 military bases, mainly Navy and Air Force. It takes an aircraft carrier battle group to keep the Strait of Hormuz open while it will take an assortment of small boats and planes to close it. Now China, Japan, Germany, France and other EU members have built or are building bases in the region. France is building a monster base to ensure it has a seat at the table.
Our Views: The United States, sourced 25% of its oil from this area in 1975, and now that it is energy independent. It has no real use for this region as it is a net exporter of crude and petroleum liquids. Or does it? China receives more oil from this region than any other country in the world, so the US confrontation with Iran could expand to a confrontation with China. It is possible.