Iran has effectively closed the Strait of Hormuz, a critical maritime chokepoint, in a direct response to recent U.S.-Israeli military actions.
This move, following through on an earlier threat, immediately impacts approximately a fifth of the world’s oil and liquefied natural gas supplies, sparking concerns over a potential global energy crisis.
The United States is reportedly considering escorting commercial vessels through the strait, though the feasibility of securing such a route remains highly questionable.
This challenge was underscored by the difficulties faced in protecting Red Sea shipping from Yemen’s Houthi rebels last year.
United Nations data indicates that traffic through the Strait of Hormuz, which typically handles a fifth of global oil and LNG, has plummeted by 97 per cent since the U.S.-Israeli conflict with Iran commenced on 28 February.
When a commander in Iran’s Islamic Revolutionary Guard Corps warned in 2011 that cutting off the strait would be “easier than drinking a glass of water”, the threat to the strait had already been made many times before.
In the years since, the Guards have continued to warn they could close it, including during tensions over sanctions and Iran’s nuclear programme in 2016 and 2018 and during Israeli and U.S. strikes in June last year.
Analysts have always regarded the closure of the strait as a measure of last resort because of the long-term strategic changes it might prompt among Iran’s enemies, and the potential for retaliation against its own energy sector.
The attack on Iran starting on February 28 with the killing of its supreme leader has changed that equation. Iranian officials describe the war as existential and with the Guards increasingly taking charge of strategy.
The narrow passage of water between Iran and Oman that links the Gulf with the Gulf of Oman is the only sea exit for oil- and gas-producing countries such as Kuwait, Iran, Iraq, Qatar and the United Arab Emirates.
Oil prices briefly climbed to their highest level since 2022 on Monday. High oil prices could trigger another cost-of-living crisis, as happened after Russia’s invasion of Ukraine in 2022, according to the United Nations.
A prolonged conflict could also cause a fertilizer shock, risking global food security. About 33% of the world’s fertilisers, including sulphur and ammonia, pass through the Strait, according to analytics firm Kpler.
An extended war could fuel fears of a global economic crisis similar to those that followed the Middle East oil shocks of the 1970s.
Shipping lanes are just two nautical miles wide and ships must make a turn opposite Iranian islands and a mountainous coast that provides cover for Iranian forces, according to shipping broker SSY Global.
