Strait of Hormuz Explained: Why the Middle East Oil Route Matters Now More Than Ever

The Strait of Hormuz is a narrow but critical waterway that could shake the global economy overnight. Though it spans just 21 miles at its narrowest point, this sea passage is the lifeline of the world’s oil and gas trade. 

Every day, nearly 20 million barrels of crude oil and vast quantities of liquefied natural gas flow through this route, connecting the energy-rich nations of the Persian Gulf to global markets. 

When geopolitical tensions rise, as they have in recent weeks, all eyes turn to this narrow strait, because if it is disrupted, the entire world feels the consequences.

What Is the Strait of Hormuz?

The Strait of Hormuz is a narrow channel linking the Persian Gulf to the Gulf of Oman and, beyond that, the Arabian Sea. 

It serves as the only maritime passage from the Persian Gulf to the open ocean, making it one of the most strategically important waterways in the world. 

On the north lies Iran, and to the south is Oman and the United Arab Emirates. Most of the ships that pass through it carry oil and gas from countries like Saudi Arabia, Iraq, Kuwait, and the UAE.

According to the U.S. Energy Information Administration, about 20 percent of the world’s daily oil supply moves through the Hormuz Strait. That’s around 20 million barrels of crude oil and nearly 20 percent of the world’s liquefied natural gas shipments. 

Most of this energy supply goes to Asia, making countries like China, India, Japan, and South Korea especially dependent on the strait’s continued operation.

Read also: Iran Strikes Back After US Missile Launch: Israel Back in Crumbles

Rising Tensions and Military Threats

Recent military confrontations between the United States, Israel, and Iran have once again put the Strait of Hormuz at risk. Iran has threatened to mine the waters in response to airstrikes targeting its nuclear facilities. 

Analysts warn that such a move could not only block the shipping route but also put the U.S. Navy forces stationed in the Persian Gulf in immediate danger.

Iran’s navy possesses the capability to deploy mines and has operatives spread across the region. Though the United States maintains over 40,000 troops in the Middle East, a closure of the strait would still present a significant challenge. 

Military experts suggest that any attempt to clear mines could take weeks and expose American personnel to high risks.

The Global Economic Impact

The closure or disruption of the Hormuz Strait would immediately drive up global oil prices. Even the possibility of such an event has already led to a sharp increase in oil futures. 

After the recent strikes, the price of Brent crude jumped above $80 per barrel, before settling slightly after no casualties were reported in a retaliatory strike by Iran on U.S. bases.

Energy analysts believe that if Iran blocks the route, oil prices could surge to $100 per barrel or higher, similar to price shocks seen during past geopolitical crises. 

That would mean higher fuel costs for consumers, rising inflation, and increased pressure on already fragile global economies.

Although countries like the United States have ramped up domestic oil production, they cannot fully compensate for the loss of 20 million barrels per day that pass through the Strait. 

Moreover, because oil is traded globally, price hikes in one part of the world ripple through everywhere.

Read also: US Launches Missiles at Iran, Is Trump Starting World War 3?

Why Iran Might and Might Not Close the Strait

While Iran has threatened to shut down the strait, experts believe that doing so would come at a significant cost to Iran itself. Nearly all of Iran’s own oil exports flow through the same route. 

Blocking the channel would cut off its vital economic lifeline and likely provoke strong military retaliation from the United States and its allies.

Closing the Strait of Hormuz would also strain Iran’s relations with its main trading partners. China, which imports over 5 million barrels of oil per day through the strait, could be severely impacted. 

Other Asian economies, including India and South Korea, also rely heavily on this route. Provoking a supply shock could alienate these partners, weakening Iran’s diplomatic standing.

Iran’s own parliament has expressed support for closing the strait, but the final decision lies with the Supreme National Security Council. 

As of now, the waterway remains open, although shipping congestion and electronic disruptions have been reported, and some tankers have rerouted as a precaution.

The View from the Global Stage

Governments and shipping companies are watching the situation closely. Maritime alerts have warned of increased electronic interference in the region, affecting navigation systems. 

Some vessels are choosing to travel through the strait only during daylight hours, while congestion builds in nearby waters.

Shipping giant Maersk stated that while it still considers the strait passable, it has contingency plans in place. Meanwhile, leaders from India and China have emphasized the importance of maintaining stability in the Persian Gulf. 

China, in particular, has called on the global community to work together to prevent further escalation.

The United States, through White House and military channels, has warned Iran against closing the strait. While some U.S. officials point to increased domestic production as a buffer, most experts agree that no country can fully replace the energy that passes through the Hormuz Strait.

Find other interesting articles on Bitrue blog! You can also directly buy selected assets on Bitrue by registering here! 

Frequently Asked Questions (FAQ)

What is the Hormuz Strait?

The Hormuz Strait is a narrow waterway connecting the Persian Gulf to the Gulf of Oman. It is a major global shipping route for oil and gas.

Why is the Hormuz Strait important?

It is the only sea passage from the Persian Gulf to the open ocean, and about 20 percent of the world’s oil supply passes through it every day.

Why is the strait in the news now?

Tensions between Iran, the United States, and Israel have raised concerns that Iran could block or mine the strait in retaliation for recent attacks.

What would happen if the strait is closed?

Global oil prices would likely surge, affecting fuel prices and economic stability worldwide, especially in Asia where most shipments are headed.

Can the U.S. or other countries bypass the strait?

Not effectively. While the U.S. has increased its own oil production, there is no alternative route that can handle the same volume of oil exports.

Is it likely that Iran will close the strait?

Experts believe it’s a risky move for Iran, both economically and politically. While it remains a threat, the actual closure is considered a last resort.