A closure of the Strait of Hormuz seems more and more likely as tensions between Iran and the United States escalate. With daily shipping volumes reaching approximately 20 million barrels of crude oil and liquids, the Strait of Hormuz represents nearly 30% of all seaborne petroleum trade.
Please feel free to join REMI for an upcoming webinar, “Energy Diplomacy: The Economic and Environmental Impacts of an Oil Shortage,” that economic associates Harry Walsh and Shane Vyskocil will be presenting on Wednesday, August 21st from 2 to 3 p.m. (ET) that demonstrates how dynamic economic modeling can be applied in the evaluation of energy impacts related to economic and fiscal resilience, in addition to sustainability, economic growth, and equity.
Closing the Strait of Hormuz would have substantial impacts on global oil markets, which could potentially lead to large spikes in pricing and oil shortages. Although the importance of imported oil has declined in the U.S. due to increased production from tight oil plays, imports via the Strait of Hormuz still account for 7% of total U.S. petroleum consumption.
The American economy would experience far-reaching impacts resulting from the closing of this Iranian strait as oil has become an integral part of many U.S. production processes, while also playing a significant role in determining national transportation and fuel costs. By altering the composition of energy inputs, shocks to energy markets can make reaching environmental goals far more complicated.
Policymakers attempting to ameliorate these effects must first understand their cause and quantify their impacts. The E3+ model fills this need, extending REMI’s economic insights into the field of energy and the environment. This webinar will explore how to examine changes in energy policy within the REMI model and potential methodological approaches to implement when analyzing alterations made to major industries.