Strait of Hormuz: if the Iran conflict shuts world’s most important oil chokepoint, global economic chaos could follow
Sarah Schiffling, Hanken School of Economics
The reported sinking of several Iranian warships by US missiles in the Gulf of Oman serves as a reminder of the maritime aspect of the conflict which began February 28 with a barrage of Israeli and American missiles targeting Iran. Two other vessels, believed to be tankers, have also been reported as having been hit by missiles, of an as yet undetermined source, in the vicinity of the strait of Hormuz, underlining the importance of this vital shipping lane – which is likely to play an key part in all sides’ calculations.
Full details have yet to emerge of the incidents. But there are already signs that the strait will become a major focus of concern because of the huge implications should the conflict disrupt maritime traffic through this the narrow outlet of the Persian Gulf. Ships crossing the strait of Hormuz carry around one-fifth of global oil supplies. That’s about 20 million barrels per day. This makes the strait the most critical energy chokepoint.
There are a small number of strategic passageways, or chokepoints on which global trade depends and which are vulnerable to disruption. Any disruption reverberates instantly through global markets and supply chains. With conflict raging in Iran and attacks across the Middle East, traders, governments and businesses will be watching oil prices closely as the markets open.
After Israel and the US launched attacks on Iran on February 28, prompting retaliatory strikes across the region from Iran, Tehran broadcast to vessels in the region claiming that the strait of Hormuz was closed.
Although the shipping lanes are only about two miles wide, actually physically closing them would be difficult to achieve. The most decisive action Tehran could take would be to mine the shipping lanes. With the large US naval presence in the area, this would be very difficult for Iran to achieve.
But a formal blockade is not necessary to stop traffic. When perceived threat levels rise, ships stay away. Big shipping companies such as Hapag Lloyd and CMA CGA have already suspended transit through the strait and advised their ships to proceed to shelter.
Vessel tracking already shows reduced movements in the strait of Hormuz. Ships are waiting to enter or exit the Persian Gulf or diverting away from the region. An advisory from the United Kingdom Maritime Trade Operations (UKMTO) Centre has warned of the “increased risk of miscalculation or misidentification, particularly in proximity to military units”.
Several ports have suspended operations after debris from an intercepted missile sparked a fire at Dubai’s Jebel Ali Port. While other ports continue to operate, the risk and uncertainty are disrupting shipping in the region.
Supply chain disruption
Hormuz is dominated by oil tankers and liquid natural gas carriers, so disruption directly hits global energy supplies. In addition, a lesser-known dependency is that one-third of the world’s fertiliser trade passes through the strait. Both energy and agricultural supply chains have already been destabilised by the Ukraine war. Further price rises could have far-reaching consequences.
The main destinations for oil and gas flowing through Hormuz are China, India, Japan, and South Korea. India, which imports about half of its crude oil through the strait, has activated contingency plans to safeguard energy supplies.
But apart from amassing strategic national stockpiles to weather immediate disruptions, there may be limited alternatives for countries dependent on getting their energy supplies through the strait. Saudi Arabia and the UAE have some pipelines for both oil and gas that can bypass the Hormuz. There is an estimated spare capacity of 2.6 million barrels per day for these pipelines. But that’s a fraction of what is normally shipped through the strait.
Oil and gas are traded globally. So even countries whose energy needs are not met by imports from the Persian Gulf will be affected by price increases. Oil prices are expected to increase to up to US$100 (£74) per barrel when markets open on Monday. Opec has agreed to modestly boost oil output in a bid to stabilise markets. But the group of oil producing countries has limited options as key members are affected by the fallout of the attacks on Iran.
Energy price increases will hit consumers directly when filling up their cars or heating their homes. They also affect companies across a wide range of industries. This has the potential to cause further supply chain disruptions.
Supply chains rely on predictability. The persistent geopolitical uncertainty has complicated operations worldwide. Limited alternatives make the de facto closure of the strait of Hormuz all the more impactful. The longer the disruption persists, the more significant and structural the economic damage will become.
Potential for escalation
There is still a potential for a catastrophic escalation in the strait of Hormuz. The sinking of a tanker would have dramatic consequences for the environment and would likely halt navigation for an extended period of time.
But prolonged instability may also prove destructive for the global economy. Previously, Iran closing the strait was seen as unlikely considering the global backlash and economic harm to Iran itself. But with regime change now the stated goal of the US-Israeli attacks, the cost of holding the world economy hostage might seem justified to the rulers in Tehran.
Sarah Schiffling, Deputy Director of the HUMLOG (Humanitarian Logistics and Supply Chain Management Research) Institute, Hanken School of Economics
This article is republished from The Conversation under a Creative Commons license. Read the original article.
- Iran has been attacked by US and Israel when peace was within reach
- US‑Israeli attack on Iran risks plunging the world into turmoil
- Iran will respond to US‑Israeli strikes as existential threats to the regime – because they are
- Despite massive US attack and death of ayatollah, regime change in Iran is unlikely
Iran’s targeting of airport, ports and hotels in reaction to US strikes has forced Gulf nations onto front lines of a war they want no part in
Kristian Coates Ulrichsen, Rice University
Washington’s allies in the Persian Gulf have found themselves in a position they have long sought to avoid: on the front line and bearing the brunt of a widening Middle East conflict.
Having been dragged into a war of choice by the U.S. – one which many around the world are calling a war of aggression – all six Gulf Cooperation Council nations have been struck by Iranian retaliatory attacks in response.
Military facilities in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates have all been hit. But the missiles and drones from Iran have been aimed at civilian infrastructure, too, including airport, ports and hotels in the opening days of U.S. and Israeli operations against Iran.
In scale and scope, the barrage marks a major departure from Iran’s previous response to being attacked by U.S. and Israeli airstrikes. In contrast, during a 12-day war in June 2025, Tehran only attacked one base in Qatar, and even then forewarned authorities in Doha.
Instead, what is occurring in the region is a scenario that planners in Persian Gulf capitals have long warned about: a deliberate attempt by Tehran to widen conflict and hit nations it sees as allied to the West.
As an expert on Gulf dynamics, I see the unfurling events as undoing years of work to de-risk the region and placing in jeopardy the unique selling point and business models that have underpinned the Gulf states’ global rise.
A cornered regime fighting for survival
Ever since the Oct. 7, 2023, attacks by Hamas and other Palestinian militants on Israel, policymakers in the Gulf nations have sought to avoid the regionalization of conflict.
Qatar led the way in mediating between Israel and Hamas, while Oman has done the same with the U.S. and Iran. Meanwhile, Saudi Arabia has maintained regular dialogue with Iran to de-escalate regional tensions.
Each of the successive escalations between Israel and Iran – in April and October 2024 and then in June 2025, with the joint U.S.-Israeli strikes – brought the region closer to, without tipping over into, all-out war.
But Iran’s actions in the opening days following what Washington has named “Operation Epic Fury” have signaled that the comparative restraint it showed during the 12-day war is firmly off the table.
The Islamic Republic is now a cornered regime fighting for its survival. As such, it is lashing out and seeking to spread the pain to regional neighbors. The logic in this approach is that Gulf nations could put pressure on the U.S., which may fear the cascading costs of a prolonged regional conflict.
Gulf nations are also obvious targets for Iran. With Iran lacking the capability to hit the U.S. mainland through conventional weapons, the American military bases that dot the Gulf region are within the reach of Tehran’s ballistic arsenal.
Psychological impact on Gulf nations
The scale of the Iranian attacks on targets in the Gulf nations in the opening two days of the current conflict underscores the extent to which Iran’s response now differs from that of June 2025: In the first two days of the conflict, Iran had fired at least 390 ballistic missiles and 830 drones at the Gulf states. By comparison, the Iranian strike on the Al-Udeid air base in Qatar last year involved 14 ballistic missiles and was a one-off attack on a single target.
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Air defense systems in Gulf nations have neutralized most of the incoming Iranian missiles, to date, and actual damage and casualties have been limited to a handful of deaths and injuries in the dozens.
But it is the intangible and psychological impact on Gulf cities under attack that threatens to inflict profound damage on the reputation and image of cities such as Dubai, Abu Dhabi and Doha. In recent years, Gulf Cooperation Council nations have presented the Gulf as an oasis of stability and havens to live and work.
This is especially the case for Dubai, which has marketed itself strongly as a hub for business and tourism. But it is also applicable to other Gulf nations as well, such as Qatar, which relies heavily on a steady stream of large-scale meetings and events.
Iran’s attacks on civilian infrastructure and soft targets – airports in Bahrain, Dubai, Abu Dhabi and Kuwait, and hotels in Bahrain and Dubai – serve to puncture this image of safe and secure Gulf capitals.
This choice of targets by Iran likely reflects a calculation that leaders in the Gulf countries would immediately feel the full impact of the war and push Washington hard to find a resolution and quick.
The subsequent targeting by Tehran on oil and gas facilities, including Ras Laffan in Qatar and Ras Tanura in Saudi Arabia, serves as a further and highly consequential step. It has already triggered a forceful response from Qatar, which shot down two Iranian jets on March 2.
There is concern among Gulf nations that the next step in the ladder of escalation could involve targeting the desalination plants that are so vital to overcoming water scarcity in the region.
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Vulnerable to escalation
As critical hubs in the global economy by virtue of their reserves of oil and gas and centrality to international shipping and aviation, the Gulf nations are uniquely vulnerable to further escalation by Iran.
Dubai, Abu Dhabi and Doha have invested heavily in creating airlines that function as “super-connectors” capable of linking any two destinations worldwide with a stop in the Gulf. A Feb. 28 drone strike on Dubai International Airport, the world’s busiest for international travel, illustrated the impact that Iran’s asymmetric responses could have on the global hub model that has come to dominate world air travel.
Already, closure of airspaces over Qatar and the UAE, as well as in Bahrain and Kuwait, has stranded tens of thousands of passengers and created the biggest disruption to global travel since the COVID-19 pandemic.
In addition, cargo operations essential to local supply chains have been heavily impacted, at the same time that seaborne trade through the Strait of Hormuz has been similarly interrupted.
Whereas initial spikes in oil prices and insurance premiums at the start of the 12-day war last year fell away as it became clear that energy infrastructure was not significantly targeted, the opposite has happened this time.
Peril and uncertainty
But the short-term shock to the global economy is not what will be of primary concern to the Gulf Cooperation Council members. Not since the Gulf crisis of 1990-91, with the Iraqi invasion of Kuwait and subsequent Gulf War, has the region faced so much peril and uncertainty.
And that is what Iran’s leaders are banking on. The attacks across the Gulf by Tehran are not, after all, without strategy. The intent is to expand the conflict, thereby significantly raising costs to the U.S. and its partners in the Gulf.
Tehran’s hope is that the economic impact will encourage Gulf leaders to press Trump for an endgame. But in attacking capitals across the region, Iran risks perhaps doing the opposite: rupturing any chance of bettering ties with rivals in the region and instead pushing them further back into Washington’s orbit after a period of drift.
Kristian Coates Ulrichsen, Fellow for the Middle East at the Baker Institute, Rice University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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