As geopolitical tensions flare in the Gulf, fears are mounting over a scenario that could send global energy markets into chaos: Iran potentially shutting down the Strait of Hormuz, the narrow maritime artery through which nearly one-fifth of the world’s oil supply flows.
Wedged between Iran to the north and Oman and the UAE to the south, the Strait of Hormuz spans just 33 kilometres at its narrowest point. Yet its importance to the global economy is enormous. On average, 20 million barrels of crude oil, worth roughly $600 billion annually, pass through its waters each day, en route from Gulf exporters like Saudi Arabia, Iraq, the UAE, Kuwait, and Qatar to energy-hungry economies around the globe.
Should Iran carry out threats to block this strategic chokepoint, the shockwaves would be immediate: oil prices would soar, inflation would ripple worldwide, and economies from Asia to Europe would scramble for alternatives.
Countries like China, India, Japan, and South Korea are particularly vulnerable. More than 80% of crude exports leaving the Gulf through the Strait of Hormuz are destined for Asian markets. China alone buys an estimated 90% of Iranian oil, while Japan sources almost three-quarters of its oil through the strait.
A disruption would likely inflate energy costs, increase production expenses, and lead to rising consumer prices across global supply chains. It could also destabilise markets already rattled by inflationary pressures and economic slowdowns.
Though Iran has routinely threatened to close the Strait in the past, it has never acted on it, even during the height of the Iran-Iraq “tanker war” in the 1980s. Analysts say the cost of such a move could be steep for Iran itself. Not only does it rely on the strait to export 1.7 million barrels per day, but it risks alienating key buyers like China, and triggering swift military intervention from the U.S. and allies.
Energy analyst Vandana Hari notes that Iran has “too much to lose,” warning that a closure would provoke regional backlash and possibly isolate Tehran from even its closest economic partners.
The strait’s vulnerability lies in its geography. Because its shipping lanes run through the territorial waters of Iran and Oman, Iran technically has the means to interfere. Experts believe Iran could deploy naval mines, fast attack boats, and submarines to disrupt traffic.
But any such action would be met with serious military consequences. The U.S. Navy and its allies have a long history of securing the Gulf’s shipping routes, including the massive naval convoy operations of the 1980s when American warships escorted oil tankers through hostile waters.
Today, U.S. officials remain firm. Secretary of State Marco Rubio recently warned that a closure would amount to “economic suicide” for Iran and urged China to intervene diplomatically. “It would hurt other countries’ economies a lot worse than ours,” Rubio noted.
To mitigate potential fallout, Gulf nations have spent years developing backup pipelines to bypass the strait. These include:
- Saudi Arabia’s East-West Pipeline, which moves up to 5 million barrels per day to the Red Sea.
- The UAE’s pipeline to Fujairah, capable of transporting 1.5 million barrels daily directly to the Gulf of Oman.
- Iran’s Goreh–Jask pipeline, which can carry around 350,000 barrels per day, though it’s not yet operating at full capacity.
Still, these alternative routes combined can only handle about 15% of the crude currently shipped through Hormuz, far from enough to shield the global market from major disruption.
As the standoff between Iran and the West continues to evolve, the Strait of Hormuz remains a flashpoint, one whose status could tip the scales of global energy security.
While a total blockade remains unlikely, the mere possibility is enough to rattle oil markets, spook investors, and reshape geopolitical alliances. Whether Tehran is bluffing or preparing to act, one thing is clear: the world can’t afford to ignore the storm gathering in the Gulf.