In recent months, the war in the Middle East has kept a narrow strip of sea at the centre of global coverage: the Strait of Hormuz. Stretching some 60 kilometers and narrowing to just 39 kilometres at its tightest point, the Strait has become a recurring reference point in discussions of global energy security. This raises a genuine question: how does a maritime passage this narrow disrupt an entire global economy?
The Strait of Hormuz is the sole maritime corridor connecting the Persian Gulf to the Gulf of Oman, and by extension, to international markets — making it the primary export route for the Middle East’s leading oil and gas producers. This position gives it a significance that exceeds its physical dimensions: Hormuz functions as one of the world’s principal economic chokepoints, where disruption can produce near-immediate consequences for global markets, as was observed this past spring. With US and Iranian representatives having concluded indirect talks on Wednesday over a durable peace settlement in the region, the prospect of a toll being imposed on vessels transiting the Strait has become increasingly plausible. This shift indicates a transition in Iran’s leverage – from military pressure to economic instruments.
A Strategic Maritime Chokepoint
Hormuz is far more than a regional maritime corridor; it is a fundamental component of the international energy system.
According to the U.S. Energy Information Administration (EIA), during 2024 and the first quarter of 2025 approximately 20 million barrels of crude oil and petroleum products per day transited the Strait of Hormuz. This represents more than one-quarter of global seaborne oil trade and roughly one-fifth of total global petroleum consumption. In addition, around 20% of global liquefied natural gas (LNG) trade, much of it originating from Qatar, also transits through the strait. Most of the oil exported by Saudi Arabia, Iraq, Kuwait, Qatar, Bahrain, the United Arab Emirates, and Iran must pass through this narrow waterway before reaching international markets.
Asian economies are particularly dependent on this route. According to the EIA (2025), approximately 84% of the oil and more than 80% of the LNG transported through Hormuz in 2024 was destined for Asian markets. China, India, Japan, and South Korea are among the largest importers, meaning that any disruption would primarily affect these economies. While Europe is less directly exposed in terms of physical volume, the interconnected, single-price nature of global commodities means European markets remain highly vulnerable to the resulting price shocks.
The Evolution of Geopolitical Tools: from Tankers to Tolls
The Strait of Hormuz lies between Iran and Oman and has represented one of the world’s major geopolitical flashpoints for decades.
Every period of heightened military tension in the region brings renewed concerns that Tehran could restrict or disrupt maritime traffic. In the 1980s, during the Iran-Iraq Tanker War, direct attacks on commercial vessels forced the United States to provide naval escort to commercial tankers, triggering severe spikes in maritime insurance premiums. Even without a complete closure, rising geopolitical uncertainty can alter shipping routes and trigger significant fluctuations in global energy prices.
In this respect, Hormuz illustrates how geography continues to play a decisive role in international politics. Yet, compared to the past, the instruments of geopolitical competition have evolved.
Recent indirect peace talks between American and Iranian representatives in Doha focused on maritime traffic through the Strait, including the possibility of imposing a mandatory transit fee. While such measures would fall short of a military blockade, they could nonetheless reshape shipping economics. Even without military confrontation, regulatory uncertainty can increase war-risk insurance premiums, force logistics companies to recalculate risk matrices, and trigger immediate speculative fluctuations in global energy prices.
The Macroeconomic Domino Effect
The economic consequences of any disruption within Hormuz would follow a rapid, systemic domino effect that extends far beyond the energy sector.
The immediate effect would be a sharp increase in oil prices. A sudden reduction in available global supply would rapidly translate into higher fuel, natural gas and electricity prices. Rising energy costs would increase industrial production costs, transportation expenses and logistics costs, while indirectly pushing up food prices and fertilizer costs. This would likely generate renewed inflationary pressures at a time when many economies are still consolidating the decline in inflation following the economic shocks of recent years.
Reducing the significance of Hormuz to oil alone would be a mistake. The stability of this maritime corridor also influences financial markets, international trade, shipping, insurance, food security and even the monetary policy decisions of central banks. A prolonged increase in energy prices could slow economic growth, reduce household purchasing power and complicate efforts by central banks to control inflation.
The Illusion of Alternative Routes
In recent years several Gulf countries have invested in infrastructure designed to reduce their dependence on the Strait of Hormuz.
Saudi Arabia operates the East-West Pipeline, which connects oil fields in the Persian Gulf to ports on the Red Sea. Likewise, the United Arab Emirates has developed a pipeline linking Abu Dhabi with the port of Fujairah on the Gulf of Oman.
According to EIA estimates, however, the total spare capacity of these alternative routes amounts to only around 2.6 million barrels per day, significantly below the approximately 20 million barrels that normally transit through Hormuz. This means that no existing infrastructure is capable of fully replacing this maritime corridor.
Lessons for Europe and Asia
The recurring tensions surrounding the Strait of Hormuz highlight a fundamental principle of international economics: economic security increasingly depends on the resilience of critical infrastructure.
For decades, globalization prioritized efficiency and cost reduction. Today, the debate has shifted towards concepts such as supply diversification, strategic autonomy, and secure access to essential resources. Europe has accelerated investments in renewable energy, liquefied natural gas terminals and diversified sources of energy supply. Asian economies are pursuing similar strategies while remaining highly dependent on energy imports from the Gulf region.
Conclusion
The Strait of Hormuz is far more than a narrow maritime passage. It represents one of the clearest points of intersection between geopolitics and the global economy.
Its strategic importance demonstrates that, in today’s interconnected world, control over critical infrastructure continues to shape international economic and political balances. Energy market stability, inflation, economic growth and even food security are influenced by a narrow stretch of water located between Iran and Oman.
In an international environment characterized by growing geopolitical uncertainty, the real challenge is not simply responding to crises when they occur but building more resilient economic systems capable of diversifying energy sources, developing alternative infrastructure, and reducing dependence on individual strategic chokepoints. The Strait of Hormuz will likely remain a key barometer of global economic stability, reminding us that geography continues to play a central role in international relations.
Author Profiles
Luigi Capoani is an economist, researcher, and lecturer in International Economics at Ca’ Foscari University of Venice. He earned his PhD in Economics from the University of Salerno through an international research pathway developed in collaboration with the University of Birmingham. He also served as university lecturer in Monetary Economics and Financial Policy at the University of Trieste. He is the founder and president of the European Youth Think Tank (EYTT), an independent non-profit organization promoting interdisciplinary research, innovation, and international scientific cooperation.
Paola Emilia Castelli is an Analyst at the European Youth Think Tank (EYTT), where she contributes to research and policy analysis on European affairs, international politics, and public policy. She is also a journalist for The Journal ASP, where her work concentrates on geopolitics. Her research interests include European integration, energy and climate policy, social inequalities, and international governance, with a particular focus on the political and socioeconomic challenges facing contemporary Europe.
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