Asian shippers fear spiralling costs as Iran threatens Strait of Hormuz closure

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 Strait of Hormuz and paralyse the crucial sea lane.

Up to 20 million barrels of oil pass each day through Hormuz, one-fifth of 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 Hormuz will have global ramifications for the Gulf 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.

Any prolonged rise is likely to soon be felt by Asian consumers.