The Strait of Hormuz, a narrow waterway between Oman and Iran, is one of the world’s most critical maritime chokepoints, handling about 20% of global oil and a significant share of liquefied natural gas exports. Its strategic importance is underscored by the sheer volume of energy resources that pass through daily—around 20 million barrels of oil and 77 million metric tons of LNG, making it indispensable for both Gulf exporters and energy-hungry importers across Asia and Europe. Recent attacks and rising tensions in the region have put the strait under intense scrutiny, with investors and policymakers closely monitoring any potential threats to its security.
A closure or significant disruption of the Strait of Hormuz would have immediate and far-reaching consequences for the global economy. Oil prices would likely spike, potentially surpassing $100 per barrel, as supply chains are strained and inflationary pressures mount worldwide. Major economies like China, India, Japan, and much of continental Europe would be particularly vulnerable, given their heavy reliance on energy imports transiting this route. Even a temporary disruption could ripple through manufacturing sectors, raise production costs, and ultimately impact consumers globally through higher prices and possible shortages.
The geopolitical risks are compounded by the limited alternatives for rerouting Middle Eastern oil and gas. While some pipelines in Saudi Arabia and the UAE can bypass the strait, their capacity is insufficient to offset a full maritime blockade. Insurance costs for tankers have already risen amid the heightened tensions, though as of late June 2025, vessel traffic remains steady and there are no direct threats to commercial shipping.
Iran, which has threatened to close the strait in response to recent US and Israeli military actions, faces its own dilemma. Blocking the passage would not only hurt global markets but also cripple Iran’s own oil exports, a vital source of national revenue, and risk alienating neighboring Gulf states. The economic and political costs of such a move are significant, making a prolonged closure unlikely, though even the threat alone is enough to unsettle global markets.
Ultimately, the fate of the Strait of Hormuz remains a barometer for global energy security and economic stability. As long as tensions persist in the region, the world will continue to watch this narrow but vital passage with apprehension, knowing that any disruption could send shockwaves through international trade and the broader global economy.
