by Dilara Ataseven
Imagine a corridor just 33km (21 miles) at its narrowest, yet pivotal to global energy flows; this is the Strait of Hormuz.
Nestled between Iran and the Musandam Peninsula of Oman (and the UAE), it's the sole sea passage linking the Persian Gulf with the Gulf of Oman and the Arabian Sea.
Despite its limited size, its strategic value is immense: 20 million barrels per day of oil, around 20–25% of global petroleum, and a significant share of LNG (liquefied natural gas) transit here passes through this strait.
The Strait of Hormuz, located between Iran to the north and Oman and the United Arab Emirates to the south, is one of the world's most strategically significant maritime chokepoints.
At its narrowest point, the strait is only about 33 kilometers (21 miles) wide, making it a tight corridor for international shipping.
However, the actual navigable shipping lanes within that space are even narrower: each direction (one for inbound and one for outbound vessels) is just 3 to 5 kilometers wide (approximately 2 to 3 miles), separated by a buffer zone for safety.
Despite its limited width, the strait is critically important because it carries an immense volume of energy resources. Roughly 20 million barrels of oil pass through the Strait every day, accounting for about 20 to 25% of the world’s total petroleum consumption. Additionally, it facilitates nearly one-fifth of the global LNG trade, making any disruption here a global concern. While countries like Saudi Arabia and the United Arab Emirates have developed alternative pipeline routes to bypass the strait, most notably the Saudi East-West pipeline, which can carry up to 7 million barrels per day, and the Abu Dhabi Crude Oil Pipeline via Fujairah, which handles about 1.5 to 1.8 million barrels per day, these alternatives still fall far short of replacing the full volume of oil and gas transiting the Strait of Hormuz. Thus, the global economy remains heavily dependent on the continued free passage through this narrow waterway.
Strategically sandwiched between major powers, Iran to the north and Oman/UAE to the south, nations rely on this chokepoint. Over the past century, this region has been a flashpoint from territorial disputes over the Tunbs islands in 1971 to the Iran‑Iraq “Tanker Wars” of the 1980s. These stories highlight how closely geography influences geopolitics.
In June 2025, Iran's parliament passed a non-binding vote to close the Strait in response to recent U.S. and Israeli strikes on its nuclear facilities. This proposal awaits final approval from Iran’s Supreme National Security Council.
Analysts argue that closing the strait would hit global oil supplies and inflate prices, serving as economic pressure on adversaries. But doing so would simultaneously strangle Iran’s own oil exports, unless the Jask terminal is fully operational, which it is not.
Imagine waking up to headlines declaring the Strait of Hormuz is sealed: a mere 33-km-wide stretch of water, now blockaded by Iranian military vessels and mines. Within minutes, financial markets panic. Traders in New York, London, and Tokyo scramble to price in the unimaginable: a sudden halt to 20% of the world’s daily oil flow. Energy markets spiral. Within hours, oil prices surge past $110 per barrel, with some estimates forecasting a spike to $120+ if the standoff persists.
The effects would be felt almost immediately. Gas prices in Europe and North America skyrocket. Airlines slash routes as jet fuel costs soar. Inflation, which is already a global concern, gets a new shot of adrenaline, driving up the cost of goods from food to clothing. Countries that rely on fuel imports, especially in Asia and Africa, face supply shocks, rationing, and potential political unrest.
Governments and central banks scramble to respond. The U.S. releases reserves from its Strategic Petroleum Reserve; Gulf Arab states call emergency OPEC+ meetings; the IMF warns of a potential recession as the energy shock ripples through global supply chains. Investors flee to gold and the U.S. dollar. Meanwhile, consumer confidence plummets, and the middle class starts tightening its belts. The economic aftershocks resemble the 1973 oil crisis, but in a world far more interconnected and fragile.
On the military front, the stakes grow by the hour. The U.S. Fifth Fleet, stationed in Bahrain, mobilizes. European allies offer naval escorts. Arab Gulf states, alarmed by both economic fallout and the signal of Iranian strength, begin coordinating for a joint response. There’s talk of a multinational intervention to reopen the channel by force. But with Iran signaling it will treat any incursion as an act of war, the world teeters on the edge of full-scale conflict.
Now imagine a different scenario, one more subtle, but no less unsettling. This time, the Strait of Hormuz isn't fully closed, but functionally disrupted. Iran doesn’t announce anything formally. Instead, it plays a shadow game, deploying small tactics that confuse, delay, and threaten shipping. Naval mines drift silently, undetectable until they’re triggered. Commercial tankers report GPS jamming, and maritime communication goes eerily quiet near Iranian waters.
A Japanese-owned tanker is boarded briefly by unknown men, then released. A day later, a Singaporean vessel reports a near-collision due to drone interference. Shipping patterns become erratic. AIS tracking data shows tankers zig-zagging, circling back, or idling for days just outside the strait. Some vessels turn around completely. The Strait isn’t closed, but it’s no longer predictable.
The economic fallout is immediate but uneven. Freight and insurance premiums double overnight, particularly for ships passing through the Hormuz route. Oil still flows, but at a reduced pace and higher cost. Large importers like India and China begin to diversify, seeking deals with Russia, the U.S., or African exporters. LNG deliveries slow, threatening power supply in hot summer months across Asia.
The broader maritime economy also feels the pinch. Shipping insurers raise risk surcharges, and several companies delay or reroute container shipments. Ports in Fujairah and Jebel Ali prepare for a rush of redirected traffic, while European energy markets watch nervously. Still, container transport remains relatively stable, buffered by large inventories and lower dependence on Gulf routes.
For Iran, this “gray zone” tactic accomplishes much: it flexes military muscle, sends a political message, and avoids direct war. For the global economy, though, the uncertainty is poison. Markets don’t crash, but they don’t function normally either. Every hour of disruption echoes in supply chains, boardrooms, and fuel stations.
Iran might hold back from closing the Strait of Hormuz despite its threats because doing so would ultimately hurt its own interests. Without fully operational backup routes like the Jask port, cutting off the strait would block Iran’s own vital oil exports, triggering economic self-sabotage. It would also alienate key trading partners like China and India, both heavily dependent on Gulf oil, and risk deepening Iran’s diplomatic isolation. Finally, any attempt to block the strait would violate international maritime law and likely provoke a strong military response from global powers, including the U.S., U.K., and even China, all of whom have a vested interest in keeping the waterway open.
To cope with a potential disruption in the Strait of Hormuz, several mechanisms are in place, though none fully replace its vital role. Countries like Saudi Arabia and the UAE have built pipeline alternatives, such as the East-West Crude Oil Pipeline (up to 7 million barrels per day) and the Abu Dhabi-Fujairah bypass (around 1.8 million barrels per day). However, both are already near capacity and cannot handle the full volume usually transported through the strait. In the short term, nations can also release oil from strategic reserves to cushion price shocks and stabilize markets. Meanwhile, a strong naval presence, led by the U.S. Fifth Fleet and allied forces, remains stationed in the region to deter threats and keep shipping lanes open through military protection if necessary. While these measures provide some relief, they are stopgaps, not permanent solutions.
If tensions over the Strait of Hormuz escalate into a full closure, the global economy could face immediate and severe consequences. Brent crude oil prices are projected to spike to $110–120 or higher, triggering a chain reaction across global markets. This would translate into rising fuel prices for consumers, with knock-on effects like higher electricity bills and more expensive goods due to increased transport and production costs. Inflation, already a concern in many regions, would worsen. Meanwhile, regional instability could deepen, as Gulf states, particularly Saudi Arabia and the UAE, might feel compelled to respond militarily, increasing the risk of a broader conflict. On a global scale, investor confidence would waver, leading to falling stock markets and a flight to safer assets like gold, whose value tends to rise in times of geopolitical uncertainty.
The Strait of Hormuz is far more than a narrow waterway; it is a vital artery of the global economy, energy security, and geopolitical balance. Iran’s recurring threats to close it serve as powerful signals of defiance, but translating those threats into sustained action is far more complicated. Tehran depends on the very same strait to export its own oil, and any closure would likely cripple its economy, alienate major buyers like China and India, and invite harsh retaliation. At the same time, the presence of global naval forces, particularly the U.S. Fifth Fleet, acts as a powerful deterrent, making a prolonged blockade unlikely to succeed. Still, even without a full shutdown, limited, asymmetric disruptions, through sabotage, mine-laying, or harassment, can send energy markets into turmoil, inflating prices and heightening geopolitical tensions. In a world increasingly sensitive to supply chain vulnerabilities and inflationary shocks, the Strait of Hormuz remains a high-stakes chessboard where even the smallest move can ripple across continents. Its importance is not just strategic – it’s existential.
