A2 · Elementary
11 min
energyglobal tradegeopoliticsshipping
Twenty Percent of Everything
El mundo respira por aquí
Iran and Oman have struck a deal on safe shipping routes through the Strait of Hormuz, but tanker attacks continue. Fletcher and Octavio dig into why this narrow passage controls so much of the world's oil and what it means for energy markets when someone threatens to shut it down.
Irán y Omán han llegado a un acuerdo sobre rutas seguras en el Estrecho de Ormuz, pero los ataques a barcos petroleros no se han detenido. Fletcher y Octavio exploran por qué este pequeño paso de agua controla tanto del petróleo mundial y qué pasa con los mercados de energía cuando alguien amenaza con cerrarlo.
8 essential A2-level terms from this episode, with translations and example sentences in Spanish.
| Spanish | English | Example |
|---|---|---|
| estrecho | strait; narrow | El Estrecho de Ormuz es muy estrecho. |
| petróleo | oil (petroleum) | Mucho petróleo pasa por el estrecho. |
| barco | ship; boat | Los barcos pagan más para pasar allí ahora. |
| precio | price | El precio del petróleo sube cuando hay ataques. |
| acuerdo | agreement; deal | Irán y Omán tienen un acuerdo sobre la ruta. |
| ruta | route | Los barcos buscan una ruta segura. |
| seguro | insurance; safe; sure | El seguro es muy caro para los barcos ahora. |
| mercado | market | Los mercados miran los ataques con atención. |
Twenty percent.
That's the number I keep turning over.
One in five barrels of oil that move anywhere on this planet passes through a body of water that, at its narrowest, is about thirty-three kilometers wide.
And right now, someone is attacking ships there.
Sí.
Yes.
El Estrecho de Ormuz es muy importante.
The Strait of Hormuz is very important.
Mucho petróleo pasa por allí.
A lot of oil passes through there.
Es un lugar pequeño pero muy, muy poderoso.
It's a small place but very, very powerful.
Small place, enormous consequences.
So here's what happened this week: Iran and Oman announced a deal on a safe passage route for vessels transiting the Strait.
But at almost the same time, a third ship belonging to Abu Dhabi's national oil company was attacked.
A third one.
The deal and the attack landed basically on the same news cycle.
El acuerdo es bueno.
The deal is good.
Pero los ataques continúan.
But the attacks continue.
Eso es un problema grande para los barcos.
That's a big problem for the ships.
Right, and that contradiction is really the whole story.
You have a diplomatic agreement on one hand and an ongoing military campaign on the other.
Which one do the energy markets actually believe?
Los mercados no confían fácilmente.
Markets don't trust easily.
El precio del petróleo sube cuando hay problemas allí.
The oil price goes up when there are problems there.
That's a consistent pattern across decades.
Every time there's a serious flare-up in the Gulf, crude prices move, sometimes sharply.
And the reason is precisely what Octavio just said: not that the oil actually stopped flowing, but that traders started pricing in the possibility that it might.
Mira, Irán sabe esto.
Look, Iran knows this.
Irán usa el estrecho como poder.
Iran uses the strait as power.
Es una herramienta política.
It's a political tool.
It absolutely is.
And the Iranians have been doing this for a long time.
This is not new behavior.
Let me give you some context here because it goes back further than most people think.
Los años ochenta.
The 1980s.
La Guerra de los Tanqueros.
The Tanker War.
Irán atacó muchos barcos entonces.
Iran attacked many ships then.
Exactly.
The Tanker War.
Between 1984 and 1988, during the Iran-Iraq war, roughly 450 merchant vessels were attacked in the Gulf.
It was a sustained campaign.
The US eventually started escorting Kuwaiti tankers under American flags.
Reagan had to make that call because the energy risk was that serious.
Y ahora pasa algo similar.
And now something similar is happening.
Barcos de Emiratos.
Ships from the Emirates.
Barcos de petróleo.
Oil ships.
Es peligroso.
It's dangerous.
ADNOC specifically, Abu Dhabi National Oil Company.
Three of their vessels attacked.
And here's something that matters from a business perspective: no injuries reported, which is important for the humans involved obviously, but it also tells you something about the intention.
These attacks are sending a message, not trying to start a war.
Un mensaje político.
A political message.
Irán dice: 'Tenemos poder aquí.
Iran says: 'We have power here.
No nos olviden.'
Don't forget us.'
That's a pretty clean way to put it.
And the business community has to respond regardless of what the intention is.
When you have three attacks on tankers belonging to the same company in a short window, you can't just ignore that as an insurance actuary.
You can't ignore it as a shipping company.
You re-price everything.
El seguro es muy caro ahora.
Insurance is very expensive now.
Los barcos pagan más para pasar por allí.
Ships pay more to pass through there.
War risk premiums.
That's the technical term.
Insurance markets started charging them almost immediately after hostilities began.
And they compound everything else.
If you're already paying more for fuel to power a longer route because you want to avoid the strait, and then you add higher insurance on top of that, the total cost of moving a cargo goes up significantly.
That cost lands somewhere.
Usually on whoever buys the thing at the other end.
La gente paga más en las tiendas.
People pay more in the shops.
El petróleo caro hace todo caro.
Expensive oil makes everything expensive.
Gasoline, plastics, fertilizers, shipping costs on consumer goods.
Oil isn't just what goes in your car.
It's embedded in the price of almost everything that gets made or moved.
Which is why a crisis in a thirty-kilometer-wide channel in the Persian Gulf can show up in grocery prices in Madrid or Toledo, Ohio.
España importa mucho petróleo.
Spain imports a lot of oil.
Cuando el petróleo sube, España tiene problemas.
When oil goes up, Spain has problems.
You felt it, right?
After Russia's invasion of Ukraine in 2022, European energy prices went through the roof.
Spain wasn't exempt from that.
Sí.
Yes.
Los precios de la electricidad subieron mucho.
Electricity prices went up a lot.
Las familias pagaron más.
Families paid more.
Fue muy difícil.
It was very difficult.
And what's happening in the Strait of Hormuz is a different mechanism but the same basic exposure.
Now, let me ask about the Oman angle, because I find that fascinating.
Oman keeps showing up as the broker.
Why Oman specifically?
Omán habla con todos.
Oman talks to everyone.
Es amigo de Irán y también de los países árabes.
It's friends with Iran and also with the Arab countries.
Es neutral.
It's neutral.
It's a remarkable position to hold.
Most countries in the region have to pick a side.
Oman has managed, for decades, to maintain working relationships with Iran on one side and the Gulf states and Western powers on the other.
Muscat has been the back-channel of choice for some extremely sensitive diplomatic traffic.
The early negotiations on the Iran nuclear deal ran through Oman before anyone knew they were happening.
Omán es pequeño pero inteligente.
Oman is small but smart.
Usa su posición para tener poder.
It uses its position to have power.
Es diplomacia real.
That's real diplomacy.
There's a lesson there for any business student, actually.
Strategic positioning isn't always about size or resources.
Sometimes it's about being the only party that everyone will still talk to.
Oman has turned that into a kind of national asset.
Exacto.
Exactly.
Y el acuerdo es sobre una ruta segura.
And the deal is about a safe route.
Los barcos tienen un camino oficial ahora.
Ships have an official path now.
In theory.
But here's where I get skeptical.
You have Iranian foreign ministry spokespeople announcing a safe route agreement, and simultaneously ADNOC is reporting its third vessel attack.
Who exactly is being told about this safe route?
And how quickly does that information filter down to whoever is making the targeting decisions?
Esa es la pregunta importante.
That's the important question.
El gobierno iraní habla.
The Iranian government talks.
Pero otros en Irán actúan.
But others in Iran act.
No siempre es lo mismo.
It's not always the same thing.
Command and control.
That's the issue.
Iranian power is not monolithic.
You have the regular government, the Revolutionary Guards, proxies at various levels.
A deal announced by the foreign ministry spokesperson doesn't automatically translate into changed behavior from every armed actor in the region.
The markets understand this, which is why you don't just see prices collapse on the announcement of a deal.
Los mercados son inteligentes.
Markets are smart.
Esperan.
They wait.
Miran si los ataques continúan o no.
They watch whether the attacks continue or not.
They price in the uncertainty, which is itself a cost.
And the longer the uncertainty persists, the more it reshapes behavior.
Shipping companies start diversifying their routes.
Some are going around the Cape of Good Hope, which adds two weeks to a voyage and a significant fuel cost.
But two weeks is a known cost.
An attack is an unknown cost.
And business, at its core, is about managing unknowns.
El Cabo de Buena Esperanza.
The Cape of Good Hope.
Un viaje muy largo.
A very long journey.
Muy caro para las empresas.
Very expensive for companies.
We saw the same thing with the Red Sea last time around, with Houthi attacks.
Some major shipping lines stopped using the Suez Canal entirely.
The detour through the Cape added somewhere between $1 million and $2 million in fuel costs per voyage for a large container ship.
That's before insurance.
And again, every cent of that gets absorbed somewhere along the supply chain and eventually shows up at retail.
El problema con el Mar Rojo todavía no está resuelto.
The problem with the Red Sea still isn't solved.
Y ahora Ormuz también.
And now Hormuz too.
Es mucho.
It's a lot.
Two of the world's critical maritime chokepoints under simultaneous pressure.
That's not something that happens often in modern history.
And it forces a genuine question about resilience in global supply chains.
For forty years, the entire global trading system was built around the assumption that these routes were open.
That assumption is being tested right now.
Y los países productores de petróleo también pierden.
And the oil-producing countries also lose.
Si los barcos no pasan, ellos no venden.
If ships don't pass, they don't sell.
That's an underappreciated point.
Iran itself exports oil.
The Strait of Hormuz is also Iran's primary export route.
So there's this strange logic where using the strait as a weapon ultimately threatens your own economic lifeline.
Which is probably why these attacks are calibrated rather than escalatory.
You want to create enough disruption to extract concessions without actually closing the thing.
Es como un juego peligroso.
It's like a dangerous game.
Todos necesitan el estrecho abierto.
Everyone needs the strait open.
Pero algunos juegan con cerrarlo.
But some play at closing it.
Brinkmanship.
That's exactly what it is.
And the energy markets have a decent track record of reading Iranian brinkmanship correctly.
They price in risk, they don't fully price in catastrophe, and historically the strait has not actually been closed.
But the historical precedent only holds until it doesn't.
That's always the tail risk that traders are sitting with.
Oye, Fletcher, usaste una palabra antes.
Hey, Fletcher, you used a word earlier.
'Estrecho.' En español, 'estrecho' significa dos cosas.
'Estrecho.' In Spanish, 'estrecho' means two things.
Oh, interesting.
Go on, I'm listening.
Sí.
Yes.
'Estrecho' es el paso de agua.
'Estrecho' is the water passage.
Pero 'estrecho' también es un adjetivo.
But 'estrecho' is also an adjective.
Significa 'narrow' en inglés.
It means 'narrow' in English.
Mi pantalón es muy estrecho.
My trousers are very tight.
El canal es muy estrecho.
The channel is very narrow.
So the Strait of Hormuz is literally named for being narrow.
'El estrecho,' the narrow one.
That's the same logic in English actually, the word 'strait' comes from the Latin for tight or narrow.
Both languages landed in the same place from the same root.
Exacto.
Exactly.
Y puedes usar 'estrecho' para muchas cosas.
And you can use 'estrecho' for many things.
Una calle estrecha.
A narrow street.
Un paso estrecho.
A narrow passage.
Una relación estrecha, una relación muy cercana.
A close relationship, a very close relationship.
Una relación estrecha.
I actually like that.
A tight relationship.
Not just narrow, but close.
So the geography and the human relationship share the same word.
Octavio, occasionally your language makes complete sense to me and it's disorienting.
No te preocupes, Fletcher.
Don't worry, Fletcher.
Seguro que el próximo episodio dices algo incorrecto.
You'll definitely say something wrong in the next episode.
Como siempre.
As always.