US Secretary of State Marco Rubio has called on China to prevent Iran from closing the Strait of Hormuz, one of the world’s most important shipping routes.
His comments came after Iran’s state-run Press TV reported that parliament had approved a plan to close the Strait but added that the final decision lies with the Supreme National Security Council.
Any disruption to the supply of oil would have profound consequences for the economy. China, in particular, is the world’s largest buyer of Iranian oil and has a close relationship with Tehran.
Oil prices rose following the US attack on Iranian nuclear sites, with the price of the benchmark Brent crude reaching its highest level in five months.
“I encourage the Chinese government in Beijing to call them (Iran) about that, because they heavily depend on the Straits of Hormuz for their oil,” Rubio had said in an interview with Fox News on Sunday.
“If they (close the Straits)… it will be economic suicide for them. And we retain options to deal with that, but other countries should be looking at that as well. It would hurt other countries’ economies a lot worse than ours.”
Around 20 percent of the world’s oil passes through the Strait of Hormuz, with major oil and gas producers in the Middle East using the waterway to transport energy from the region.
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Any attempt to disrupt operations in the Strait could send global oil prices skyrocketing.
Oil prices jumped briefly when trading began on Monday, with Brent climbing to $81.40 a barrel. However, it then slid back to around $78, up 1.4 percent on the day.
“The US is now positioned with an overwhelming defence posture in the region in the event of any Iranian counterattacks.
“But the risk for oil prices is that the situation could escalate severely further,” said Saul Kavonic, head of energy research at MST Financial.
The cost of crude oil affects everything from how much it costs to fill up your car to the price of food at the supermarket.
China buys more oil from Iran than any other nation, with its imports from Iran surpassing 1.8 million barrels per day last month, according to data by ship tracking firm Vortexa.