The markets shuddered on Tuesday morning on reports that Iranian troops had fired upon and boarded a U.S. oil tanker traveling through the Strait of Hormuz, a strip of water separating Iran from the Arabian Peninsula.
The Pentagon later said that Iran's Revolutionary Guard had boarded the Maersk Tigris, a Marshall Islands-flagged cargo ship with no U.S. citizens on board. The episode emphasized the importance of oil choke points, narrow bodies of water through which the world's crude supply travels and which can be flashpoints in international relations.
The strait, which connects the Persian Gulf and the Arabian Sea, is 21 miles wide at its narrowest and handles nearly 20 percent of the world's oil supply. Some 17 million barrels of petroleum products travel through the strait each day, according to 2013 data from the U.S. Energy Information Administration, the most recent available.
The volume of oil traveling through the Strait of Hormuz and the Strait of Malacca, which links the Indian and Pacific oceans, makes up 57 percent of overall maritime oil transportation, according to the EIA.
The Maersk Tigris was taken under the control of the Revolutionary Guard in a portion of the strait that is Iranian territorial waters, but accessible to all ships for "innocent passage." The USS Farragut, a U.S. Navy destroyer is headed to the area, but has "no authority" to enter the Iranian-controlled part of the strait, according to U.S. defense officials.