<div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Oil prices are surging following the </span><a href="https://www.9news.com.au/world/us-israel-attack-iran-live-updates-donald-trump-latest-world-news-headlines/95e0f1d7-cdf4-42ad-866d-569779885e71" rel="" target="" title="United States' and Israel's attacks on Iran"><span>United States' and Israel's attacks on Iran</span></a><span>, but not because of Tehran's status as a significant fuel producer.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Instead, it's because of the </span><a href="https://www.9news.com.au/iran" rel="" target="" title="Islamic Republic's"><span>Islamic Republic's</span></a><span> control over the Strait of Hormuz, one of the world's most important strategic waterways.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>This is what you need to know about it.</span></div></div><div><div id="adspot-mobile-medium"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>LIVE UPDATES:</span></strong><span> </span><a href="https://www.9news.com.au/world/us-israel-attack-iran-live-updates-donald-trump-latest-world-news-headlines/94a5cc0c-0369-44b9-8765-70bb2633e2bd" rel="" target="" title="US claims Iran made chilling nuclear threat"><strong><span>US claims Iran made chilling nuclear threat</span></strong></a><strong><span></span></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><h3><strong><span>What is the Strait of Hormuz?</span></strong></h3></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The Strait of Hormuz is the only waterway in or out of the Persian Gulf. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Passing between Iran and Oman, it's more than 150km long but at its narrowest just 39km wide.</span></div></div><div><div class="OUTBRAIN" data-reactroot="" data-src="//www.9news.com.au/world/us-israel-attacks-iran-strait-of-hormuz-explained-oil-gas-prices/f8e7c1ed-f6d9-4fe5-8277-6a11c09d8de6" data-widget-id="AR_5"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><h3><strong><span>Why is it so important for oil prices?</span></strong></h3></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Despite its size, the Strait of Hormuz facilitates an enormous proportion of the oil trade.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>About 20 per cent of global supply – some 15 million barrels a day – goes through the passage, as it's the only maritime route for the oil-rich Gulf states such as Qatar, Bahrain, Kuwait, Saudi Arabia and the UAE to get their shipments out to the rest of the planet.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The area has now gone from thoroughfare to bottleneck, though.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Shipping companies including Danish firm Maersk, the world's largest, have indefinitely suspended crossings of the Strait, insurers won't back any voyages through the area, and that was all before Iran's Revolutionary Guard (IRGC) threatened to fire on any vessels passing through.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"No one is wanting to navigate it, and there's no insurer who's willing to stand behind any transport going through there right now," said Tom Goldsby, logistics chairman in the Supply Chain Management Department at the University of Tennessee.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/us-terror-threat-level-iran-israel-strikes-what-is-it-explained/0ef6e153-f786-4ef2-9aaa-85a0e7d131bb"><strong><span>USA 'on war footing' after Iran's chilling vow for revenge</span></strong></a><strong><span></span></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>All up, there's about 200 various tankers either stranded in the Persian Gulf or waiting just outside, according to analytics firm Kplr. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Those ships that got stuck in the Gulf are not going anywhere," Goldsby said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"There's also a whole host of ships that were heading into the Gulf to replace them, and of course they're anchored or going elsewhere now."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Although eight members of the OPEC+ cartel announced an increase of oil production on Sunday, much of that is elementary; with the Strait of Hormuz closed, extra barrels from Saudi Arabia, Iraq, the United Arab Emirates and Kuwait won't easily find their way onto the global market.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>WORLD REACTION:</span></strong><span> </span><a href="https://www.9news.com.au/world/us-israel-attacks-iran-conservative-commentators-lash-donald-trumps-decision-to-attack-iran/ba98ba21-78ba-428b-bfa9-ad23844cba82"><strong><span>Conservative commentators lash Donald Trump's decision to attack Iran</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>On top of that, if supply from Iran dries up it may add to price pressures. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Most of the Islamic Republic's supply of 1.6 million barrels a day go to China and, to a lesser extent, India.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Since oil is a global, fungible commodity, a disruption anywhere affects prices everywhere," Clayton Seigle, a senior fellow at the Centre for Strategic and International Relations, a Washington, DC-based think tank, wrote in a recent research note.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"A loss of Iranian barrels would cause China to bid for substitute supplies," Seigle said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/potts-point-man-shot-by-police-in-inner-sydney-after-reports-of-women-being-assaulted/88618241-b8a9-42ad-b3ab-120098539c2a"><strong><span>Officers 'traumatised' after man shot dead by police</span></strong></a><strong><span></span></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><h3><strong><span>How high will oil prices go?</span></strong></h3></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>On Monday, crude oil prices jumped 6.2 per cent to $US77 a barrel – similar to the 6 per cent jump seen last month when Iran temporarily shut down parts of the strait for what it said was a military drill – however they've since risen again.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>As of 6am today, the international benchmark brent crude has been hovering around $US81.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Analysts, though, have warned that figure could hit triple digits should this conflict drag out into a protracted, lengthy war.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"If we start to see additional direct attacks against energy infrastructure, not just in Saudi Arabia and Kuwait, but in other countries in the region, then that's when the market will start to think about a push toward $US90 and perhaps even beyond," Torbjorn Soltvedt, principal Middle East analyst at risk intelligence company Verisk Maplecroft, said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>However, other analysts have predicted a retreat to around $US65 to $US70 a barrel after a near-term spike.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>HIP-POCKET PAIN:</span></strong><span> </span><a href="https://www.9news.com.au/finance/us-israel-attack-iran-economic-inflation-impact-australia/f2fad1f9-e0d3-40b1-9693-d01673efca43"><strong><span>'Tax on households' coming for Aussies due to Iran war</span></strong></a><strong><span></span></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"The key question for the global economy is obvious: will the Strait of Hormuz be effectively closed for oil and gas exports for more than a few weeks?" Berenberg chief economist Holger Schmieding said. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"If so, it would hurt global growth and raise global inflation noticeably. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"But I would expect Trump to go to great lengths to prevent a lasting surge in energy prices that could hurt him at home ahead of the US midterm elections in November."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Australian motorists can </span><a href="https://www.9news.com.au/finance/us-israel-attack-iran-economic-inflation-impact-australia/f2fad1f9-e0d3-40b1-9693-d01673efca43" rel="" target="" title="expect to pay an extra 1 cent per litre of fuel for every dollar the price of crude oil rises"><span>expect to pay an extra 1 cent per litre of fuel for every dollar the price of crude oil rises</span></a><span>, according to research by AMP.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/world/us-israel-attacks-iran-richard-marles-confirms-australian-military-personnel-safe-after-strike-on-dubai-air-base-uae/7a5628dc-c4d2-4779-9bff-18567dc026a1"><strong><span>Australian military personnel safe after Dubai air base hit</span></strong></a><strong><span></span></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><h3><strong><span>Is it only oil that is impacted?</span></strong></h3></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>No. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Just as the Persian Gulf is a major source of the world's oil supplies, it's also home to huge natural gas (LNG) reserves, which are also traded through the Strait of Hormuz.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>With much of the continent's supply already cut off due to Russia's invasion of Ukraine, European gas futures contracts skyrocketed by 38 per cent, while prices rose 3 per cent in the US.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Qatar is a major supplier for Europe, but its state-run energy company has paused LNG production after an Iranian attack on one of its facilities.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><em><span>– with Associated Press, CNN</span></em><span></span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><em><span>NEVER MISS A STORY:</span></em></strong><span> </span><strong><em><span>Get your breaking news and exclusive stories first by following us across all platforms.</span></em></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><ul><li><strong><em><span>Download the 9NEWS App here via</span></em></strong><span> </span><a href="https://apps.apple.com/au/app/9news/id1010533727" target="_blank"><strong><em><span>Apple</span></em></strong></a><span> </span><strong><em><span>and</span></em></strong><span> </span><a href="https://play.google.com/store/apps/details?id=nineNewsAlerts.nine.com&amp;hl=en_AU&amp;pli=1" target="_blank"><strong><em><span>Google Play</span></em></strong></a></li><li><strong><em><span>Make 9News your preferred source on Google by</span></em></strong><span> </span><a href="https://9.nine.com.au/8x987w" target="_blank"><strong><em><span>ticking this box here</span></em></strong></a></li><li><strong><em><span>Sign up to</span></em></strong><span> </span><a href="https://login.nine.com.au/edm?client_id=nineatnine" target="_blank"><strong><em><span>our breaking newsletter here</span></em></strong></a></li></ul></div></div>