As tensions between Iran and the U.S. flare over recent strikes on Iranian nuclear sites, fears are growing that Tehran may retaliate by targeting one of the world’s most vital oil shipping lanes — the Strait of Hormuz. This narrow waterway, through which nearly a fifth of global oil and gas passes, plays an outsized role in the global economy. Any disruption could send shockwaves through energy markets, spike oil prices, and destabilize global trade.
What and Where Is the Strait of Hormuz?
The Strait of Hormuz is the world’s most critical oil transit chokepoint. Situated between Iran to the north and Oman and the UAE to the south, it links the Persian Gulf with the Gulf of Oman and the Arabian Sea. Despite being only about 50 kilometers wide at its entrance and narrowing to roughly 33 kilometers at its tightest point, it handles enormous volumes of oil daily.
The strait is deep and wide enough to accommodate the world’s largest oil tankers. According to the U.S. Energy Information Administration (EIA), an estimated 20 million barrels of oil — worth nearly $600 billion annually — passed through it daily in the first half of 2023. This crude comes from major oil producers such as Saudi Arabia, Iran, Iraq, Kuwait, the UAE, and Qatar.
Why Is the Strait So Important?
A closure of the Strait of Hormuz would have dramatic consequences for the global economy:
- Oil prices would surge due to the sudden supply crunch.
- Inflation would rise globally, as higher fuel and transportation costs drive up the prices of goods and services.
- Major economies in Asia — particularly China, India, Japan, and South Korea — would be heavily impacted. In 2022, around 82% of crude and condensate exports through the strait were destined for Asia.
- China, which reportedly buys 90% of Iran’s oil exports, would face increased energy costs that could impact global supply chains.
- India relies on the strait for nearly half its crude and 60% of its natural gas imports.
- Japan and South Korea source roughly 75% and 60% of their crude, respectively, via the strait.
What If Iran Closes the Strait?
Iran has repeatedly threatened to shut down the Strait of Hormuz during past geopolitical tensions but has never followed through. However, the current situation is more volatile, and experts are not ruling out the possibility.
The former head of UK intelligence agency MI6, Sir Alex Younger, called a potential blockade his “worst-case scenario” amid the growing Iran-Israel conflict. Kuwait University geopolitical expert Bader Al-Saif warned that any attempt to close the strait would trigger immediate and widespread market panic.
Saudi Arabia would be among the most affected, exporting around 6 million barrels of crude per day through the strait — more than any other Gulf state. Iran itself exports about 1.7 million barrels daily, earning $67 billion in oil revenue in the financial year ending March 2025, its highest in a decade.
How Could Iran Block the Strait?
Under international law, territorial waters extend 12 nautical miles from a country’s coast. At its narrowest point, the Strait of Hormuz lies within the territorial waters of Iran and Oman, giving Tehran potential leverage.
Iran has several military options:
- Deploying naval mines using fast boats or submarines.
- Launching attacks on tankers or warships using its Islamic Revolutionary Guard Corps (IRGC) navy, which operates fast-attack craft armed with anti-ship missiles, submarines, and semi-submersible vessels.
- Harassing or boarding ships under the guise of inspections or security checks.
While Iran could cause temporary disruption, experts believe any blockade would be short-lived. The U.S. and its allies could move swiftly to re-establish shipping lanes using naval power — as they did in the 1980s during the “tanker war” phase of the Iran-Iraq conflict. At that time, American warships escorted oil tankers through the Gulf in what became the largest convoy operation since World War II.
Would Iran Really Go That Far?
Iran’s parliament recently backed a motion to shut down the strait, but the ultimate decision lies with the country’s Supreme National Security Council, overseen by the Supreme Leader. While Iran’s leadership has issued similar threats in the past, it has never acted on them.
U.S. Secretary of State Marco Rubio warned that closing the strait would be “economic suicide” for Iran and called on China — Iran’s top oil buyer and a key strategic ally — to intervene diplomatically.
Analysts argue that Iran has more to lose than gain:
- Alienating neighboring Gulf states, many of whom also rely on the strait to export oil.
- Provoking backlash from China, which has a vested interest in keeping the strait open and prices stable.
- Triggering a potential military confrontation with U.S. and allied forces.
Vandana Hari, a respected energy analyst, summed it up: “Iran risks turning its oil and gas-producing neighbors into enemies and invoking the ire of its key market China by disrupting traffic in the Strait.”
Are There Alternatives to the Strait?
Due to the persistent threat of a closure, Gulf oil producers have invested in alternative export routes over the years:
- Saudi Arabia’s East–West pipeline (also known as Petroline) transports up to 5 million barrels of crude daily from the eastern oil fields to the Red Sea coast.
- In 2019, Saudi Arabia also repurposed a natural gas line for temporary crude transport.
- The UAE’s Habshan–Fujairah pipeline, with a daily capacity of 1.5 million barrels, connects inland oil fields directly to the Gulf of Oman.
- Iran’s Goreh–Jask pipeline, opened in 2021, aims to bypass the strait by moving oil to the Gulf of Oman. It currently transports about 350,000 barrels per day, though its full potential has yet to be realized.
However, these pipelines combined can only divert about 3.5 million barrels per day — less than one-fifth of the total volume that normally flows through the Strait of Hormuz.
The Bottom Line
The Strait of Hormuz is more than a geographical chokepoint — it’s a global economic lifeline. While Iran has the capacity to disrupt traffic in the short term, doing so would likely provoke international backlash, damage its own economy, and alienate key partners like China.
The threat of a blockade remains a potent geopolitical lever, but any actual closure would likely be temporary — and costly for all involved.
