Iran’s declaration that it would close the Strait of Hormuz immediately sent tremors through the “black gold” market. When energy — the “lifeblood” of many economies — is disrupted, the global recovery becomes ever more fragile.
Long regarded as the world’s oil heartland, the Middle East not only hosts many of the industry’s major producers but also occupies a pivotal position in global trade thanks to the Strait of Hormuz.
Strategically located between Oman and Iran, linking the Persian Gulf with the Indian Ocean, the strait handles around 20% of global crude oil supplies and roughly 30% of liquefied natural gas (LNG).
It serves as a crucial export corridor for key producers including Iran, Saudi Arabia, Iraq, Kuwait, Qatar, and the United Arab Emirates.
Its strategic importance also lies in the absence of viable alternatives. Although some regional states operate pipelines to other maritime routes, their capacity is limited and insufficient to meet demand. For LNG in particular, there are virtually no feasible substitutes for exports from Qatar and the UAE.
Should Iran, which sits along the strait’s northern shore, enforce a blockade, global energy supplies would come under severe strain. Tankers could divert via the Cape of Good Hope, but this would add weeks to shipping times and significantly increase costs.
Any disruption to flows through Hormuz would trigger sharp oil price spikes. Indeed, global prices extended gains for a third consecutive session on March 3 after Tehran announced a halt to oil exports via the strait.
Analysts warn that a prolonged closure could push prices above 100 USD a barrel, fuelling inflation and weighing heavily on global growth.
As a result, alarm bells were immediately sounded. Many countries have moved to brace themselves and activate contingency plans to confront the risk of an energy crisis.
Asia and the Gulf are widely seen as the regions most severely affected should the Strait of Hormuz be brought to a standstill. Many Gulf states rely heavily on revenues from oil exports; prolonged disruption could therefore deal a heavy blow to their economies and trigger budget deficits across the region.
Asia, which receives around 80% of the crude transported through the Strait of Hormuz, would feel the greatest strain if this vital maritime route were paralysed.
Meanwhile, the US may be less severely affected, as Washington is largely energy self-sufficient and imports only around half a million barrels of oil per day from the Gulf. However, this does not mean that the world’s largest economy is immune to the impact of the conflict. Higher global oil prices could directly hit the pockets of US consumers and businesses alike.
Of concern, the market gap created by any closure of the Strait of Hormuz could prove difficult to offset. The Organization of the Petroleum Exporting Countries and its partners (OPEC+) has announced an output increase of 206,000 barrels per day in April 2026 in a bid to reassure markets. However, many experts argue that OPEC’s move would amount to little more than a drop in the ocean if disruptions were to persist and spread across the Gulf.
Observers warn that a prolonged full blockade of the Strait of Hormuz by Iran could expose global markets to a “historic shock.” However, such a move would also harm Tehran itself, a country heavily reliant on revenue from oil exports. In the current conflict, Iran is using the “Hormuz card” as leverage in negotiations, but it could also backfire, inflicting serious damage on its own economy.
