Why oil remains expensive even though it flows again through Hormuz: transporting each barrel already costs up to 35 dollars

Oil tankers transiting the Strait of Hormuz are governed by a set of international maritime law rules and International Maritime Organization (IMO) conventions, as well as the legislation of the coastal and flag States. Rather than a single “permit,” there is a combination of safety, environmental protection, and maritime security obligations that the vessel must fulfill to exercise its right of passage.

1. Right of passage under the United Nations Convention on the Law of the Sea (UNCLOS)

The Strait of Hormuz is a strait used for international navigation, situated between the territorial waters of Iran and Oman. According to the United Nations Convention on the Law of the Sea (UNCLOS):

• The regime of “transit passage” applies: vessels, including oil tankers, have the right to pass through the strait continuously and expeditiously between one part of the high seas (or exclusive economic zone) and another.
• The vessel must refrain from any threat or use of force and limit itself to activities related to normal navigation.
• It must comply with internationally accepted standards on maritime safety and environmental protection (those of the IMO).
• Coastal States may enact regulations concerning navigation safety and environmental protection, provided they do not unjustifiably impede transit or discriminate against certain flags.

2. Key IMO international conventions

To navigate legitimately through the strait, an oil tanker must comply with several basic IMO conventions, which specify what is meant by “internationally accepted standards”:

• SOLAS (International Convention for the Safety of Life at Sea): requires safety equipment and standards (structural, fire protection, radiocommunications, lifeboats, etc.). The vessel must have:
  • Certificate of construction and equipment safety.
  • Updated navigation and communication systems (AIS, VHF, radar, ECDIS when applicable).
• MARPOL (International Convention for the Prevention of Pollution from Ships): particularly Annex I (hydrocarbons). Requires:
  • Double hull in most modern oil tankers.
  • Segregated ballast tanks and discharge control systems.
  • Hydrocarbon logbook and pollution emergency plan (SOPEP/SMPEP).
• STCW Convention: establishes the qualifications and training of onboard personnel. The crew must be licensed and certified for the type of vessel and navigation area.
• Codes for construction and operation of oil tankers (e.g., IBC or IGC Code if carrying certain products, and other specific safe design and operation standards).

3. Maritime security and protection (ISPS)

Following the adoption of the ISPS Code (International Ship and Port Facility Security Code), oil tankers must comply with security obligations:

• Hold a valid international ship security certificate.
• Implement a security plan approved by the flag State, with measures according to the threat level (access controls, surveillance, security communications).
• Designate a ship security officer and maintain coordination with the company security officer and port facility security officers.

Although ISPS is not “specific” to the Strait of Hormuz, in a highly strategic sensitive area, compliance with these rules is essential to avoid incidents and to demonstrate to coastal States that the vessel does not pose a security risk.

4. Flag State and port State control

In addition to the international framework, the following are involved:

• The flag State, which must:
  • Issue and renew certificates required by SOLAS, MARPOL, STCW, and ISPS.
  • Supervise the vessel through surveys and audits.
• The port States (e.g., Gulf States or destination countries), which may conduct port State control (PSC) inspections and, if serious non-compliance is detected, detain the vessel or deny its departure, effectively preventing further passage through the strait until deficiencies are remedied.

5. Specific traffic measures in the strait

In congested straits it is common to establish:

• Traffic separation schemes (TSS): navigation lanes, separation zones, and crossing rules approved by the IMO, which vessels must respect to reduce collision risk.
• Navigation practice recommendations: continuous use of autopilot and enhanced watchkeeping; provision of tugs in certain areas; continuous communication with maritime traffic centers when available.

Although details vary and depend on IMO decisions and coastal authorities, from a regulatory standpoint the oil tanker must follow these routes and rules as part of compliance with “generally accepted” safety standards.

6. Summary

In sum, an oil tanker transiting the Strait of Hormuz:

• Exercises a right of transit passage under UNCLOS, conditioned on peaceful navigation and compliance with international rules.
• Must fully comply with IMO conventions (SOLAS, MARPOL, STCW, ISPS, and specific tanker codes).
• Is subject to supervision by its flag State and the port States that verify its certification and conditions are compliant.
• Must follow traffic separation schemes and other navigation management measures established for the strait.

Meeting these requirements, more than an isolated procedure, means maintaining the entire international regime of safety, environment, and maritime security that enables legitimate passage through one of the world’s most sensitive energy corridors.

The European Central Bank (ECB) does not have a specific and separate competence to “supervise energy inflation” as such. Its mandate is broader: to ensure price stability across the euro area. Within that mission, the evolution of energy prices — electricity, gas, fuels — is a key factor that the ECB analyzes in great detail, but it does not regulate directly.

1. General mandate of the ECB on price stability

According to EU Treaties (Article 127 of the TFEU and the ESCB Statute), the primary objective of the ECB is to maintain price stability in the euro area. In practice, this has been defined as keeping inflation around 2% in the medium term.

This implies:

• Constantly monitoring the harmonized index of consumer prices (HICP) for the euro area, which includes energy, food, industrial goods, and services.
• Making monetary policy decisions (interest rates, asset purchase programs, liquidity conditions) to ensure total inflation converges to the medium-term target.

Energy, therefore, is part of the “basket” of prices the ECB looks at to assess whether its objective is met, even though there is no separate mandate on “energy inflation.”

2. Role of energy inflation in the ECB’s strategy

Energy is a very volatile component of inflation. For this reason, the ECB distinguishes between:

• Headline inflation, which includes energy and food.
• Core inflation, which excludes energy and unprocessed food to better capture more persistent price pressures.

The ECB’s competences regarding energy are reflected in several areas:

• Analysis and forecasting: the ECB studies the impact of energy prices on overall inflation, production costs, wages, and inflation expectations. It uses this analysis to project scenarios and calibrate its monetary policy.
• Expectations management: when energy price increases are intense, the ECB assesses whether they may “spill over” to other prices and wages. If it perceives a risk of a price-wage spiral, it may respond by tightening monetary policy.
• Communication: in its statements and press conferences, the ECB explains what portion of inflation is due to energy and how it plans to respond, thus influencing economic agents’ expectations.

In summary, energy inflation is one of the main variables feeding the ECB’s diagnosis, but always with a view to the overall objective of price stability, not a specific sectoral sub-objective.

3. What the ECB does not do in energy matters

It is equally important to clarify what lies outside its competences:

• Does not set energy prices: the ECB does not decide electricity tariffs, tolls, regulated charges, or special taxes on fuels.
• Does not regulate energy markets: the organization of wholesale and retail gas and electricity markets, supervision of companies and networks, or auction design belong to sectoral regulators and Member States, within the EU regulatory framework.
• Does not grant subsidies or compensate bills: aid mechanisms, social bonuses, or regulated price caps are the responsibility of national governments and EU institutions with budgetary powers.

Therefore, the ECB acts on energy inflation indirectly, through general monetary conditions (interest rates, liquidity, exchange rate) that influence aggregate demand, financing costs, and, in some cases, the international price of energy commodities via the euro exchange rate.

4. Coordination with other policies

The response to episodes of strong energy inflation usually requires a combination of:

• Monetary policy (ECB): aimed at preventing the energy “shock” from permanently transmitting to overall prices and wages.
• Fiscal policy (States and EU): selective aid, temporary tax reforms, or regulatory adjustments to mitigate the social and economic impact of energy price increases.
• Energy and competition policy: structural reforms of energy markets, promotion of renewables and efficiency, and monitoring of possible abusive conduct.

The ECB, therefore, focuses on preserving medium-term price stability and anchoring inflation expectations, while other institutions handle specific sectoral instruments on energy.

In conclusion, the ECB’s competences regarding energy inflation are mainly monitoring, analysis, and aggregate macroeconomic response through monetary policy. They do not include direct regulation of energy prices or sectoral supervision, which are responsibilities of other national and European authorities.

The National Statistics Institute (INE) cannot “change the CPI” at will: the update of the Consumer Price Index is framed within a rather dense legal framework that sets who decides, with what methodology, what quality guarantees must be respected, and how results must be disseminated.

1. General framework of public statistical function

• Law 12/1989, on the Public Statistical Function (BOE) is the basic regulation. It requires that official statistics:
  • Be approved and organized through the National Statistical Plan (art. 8), where each operation is defined (purposes, population, territorial scope, financing).
  • Respect statistical confidentiality and personal data protection, regulating data collection, processing, storage, and dissemination.
  • Use homogeneous concepts, classifications, and nomenclatures to ensure comparability and coherence of results.
  • Be produced with criteria of quality, timeliness, and efficiency, in line with the European Statistics Code of Practice.
  The CPI is one of the “for state purposes” statistics subject to this framework.
• Royal Decree 803/2022, which approves the Statute of the Autonomous Body INE (BOE), strengthens:
  • The technical autonomy of the INE to choose methods and sources, within applicable regulations.
  • The obligation to organize statistical production with criteria of quality, modernization, use of administrative records, and new sources.
  • The presence of a Data Protection Officer and the centrality of confidentiality in relations with respondents.

2. National Statistical Plan and CPI framework

• The National Statistical Plan 2025‑2028, approved by Royal Decree 1225/2024 (BOE), integrates consumer price statistics among the mandatory operations of the General State Administration.
• According to art. 8 of Law 12/1989, the Plan must detail for each statistical operation (including the CPI) its purpose, reference population, territorial scope, responsible bodies, and resources, which acts as a “legal mandate” for its periodic production.
• The Plan itself connects the Spanish system with the European statistical framework, citing, among others:
  • Regulation (EC) 223/2009 on European statistics.
  • Regulation (EU) 2019/1700, establishing a common framework for statistics on persons and households.
  • Regulation (EU) 2021/690, including the European statistics program.
  These instruments require the INE to maintain European standards of quality, comparability, and timeliness, also for price indices.

3. Specific rules on the CPI system

• The direct reference to the CPI methodology and structure is Order EHA/3411/2011, of December 5, which establishes the new Consumer Price Index system, base 2011 (BOE). It sets out specific requirements:
  • The INE must produce the CPI monthly with base 2011 from January 2012 (art. 1).
  • The population coverage must be all residents in private households in Spain (art. 2).
  • It must use the COICOP classification (Classification of Individual Consumption by Purpose) and produce sub-indices by groups: food, housing, transport, etc. (art. 3).
  • System updates (base changes) must be supported by the Household Budget Survey and methodological improvements, including revision of weights, basket of goods, sampling cores, and calculation methodology.
• The order also determines how relative variations are managed in base changes (transitional provision), to ensure continuity of series.

4. Relation with the HICP and European regulations

• Besides the national CPI, Spain is obliged to produce the Harmonized Index of Consumer Prices (HICP), regulated by specific EU regulations and financing and technical development decisions (e.g., minimum standards for HICP revisions mentioned in the Official Journal of the EU of 13.11.2001).
• The INE must:
  • Apply harmonized methodologies defined by Eurostat so that the Spanish HICP is comparable with other Member States.
  • Notify and document any methodology or weighting revisions according to EU minimum standards on harmonized index revisions.
  • Ensure coherence between national CPI and HICP, although both indices may differ in coverage and use (e.g., exclusions of certain concepts).

5. Other relevant obligations

• The National Statistical Plan 2025‑2028 emphasizes the need to use administrative records and new data sources (e.g., sales scanner data, digital sources) to improve quality and reduce respondent burden, which directly affects how the CPI is updated.
• Law 12/1989 and the INE Statute require:
  • Disseminating the CPI regularly, transparently, and accessibly, publishing methodology and relevant changes.
  • Respecting official publication deadlines and schedules, coordinated with the European Statistical System.
  • Always protecting the confidentiality of individual information used to calculate the index.

In summary, to update the CPI the INE must operate within a triple framework: the Law on the Public Statistical Function and its Statute (which set principles and technical autonomy), the National Statistical Plan (which specifies the operation), and the specific orders and regulations that determine base, basket, methodology, and alignment with European HICP standards.