What happens if Iran shuts Strait of Hormuz? Artery of global oil turns into ticking time bomb

Amid the escalating confrontation between Iran and Israel, one of the most pressing concerns for the global community is the possibility of Tehran shutting down the Strait of Hormuz – the world’s most strategically viral oil transit chokepoint. While Tehran has frequently threatened to block the waterway in response to military pressure or sanctions, the prospect becomes far more plausible if the conflict with Israel explodes into a full-scale war.

What is the Strait of Hormuz?

The Strait of Hormuz is a narrow passage of water between Iran and Oman, connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea. It’s only about 21 miles wide at its narrowest point, yet handles the movement of a staggering 20–25 per cent of global oil supply.

As per 2023 data, roughly 17 million barrels of oil per day pass through the strait. It is the primary route for oil exports from Saudi Arabia, Iraq, UAE, Kuwait, Qatar, and Iran itself. Liquefied Natural Gas (LNG) from Qatar – a top global supplier – also transits through here.

Why would Iran close the strait?

Iran has long used the threat of closing the strait as strategic leverage against the West. In the past, it has responded to US sanctions, military drills, or Israeli operations with this warning. In the event of a direct war with Israel, especially if Israeli strikes hit Iran’s oil facilities, Iran could retaliate by attempting to shut the strait, either fully or intermittently, through naval blockades, mines, or missile strikes on commercial vessels.

What if it does?

Global oil prices may skyrocket: A shutdown would block the transit of millions of barrels of oil per day. That would cause oil prices to surge above USD 120–150 per barrel, possibly even higher depending on the duration of the blockage. It may also trigger panic buying and stockpiling of crude across major economies, and hit oil-importing nations like India, China, Japan, and EU members the hardest.

Disruption of global shipping and trade: Beyond oil, the Strait of Hormuz is a major artery for global shipping. Its closure would paralyse maritime cargo routes, particularly for Gulf countries; delay shipments of essential goods, raising global shipping costs; and force vessels to reroute via longer paths, increasing freight time and insurance premiums.

Energy crises in Asia and Europe: India, which imports over 60 per cent of its crude from the Gulf, would face severe inflation, fuel shortages, and economic strain. China, the world’s largest crude importer, would need to urgently diversify supply and use strategic reserves. Europe, already facing tight LNG supplies post-Ukraine war, would lose key LNG imports from Qatar, aggravating its energy crunch.

Global market panic and recession fears: The combined effect of energy disruption, inflation, and trade delays could send stock markets into a tailspin, especially in oil-sensitive sectors like airlines, shipping, and manufacturing. It may also force central banks to raise interest rates or inject liquidity to calm markets, and trigger recession fears globally, especially in developing economies already facing debt pressure.

Regional military escalation: A closure of Hormuz wouldn’t go unanswered. The U.S., UK, France, and Gulf states have naval forces stationed in the region and would likely deploy warships to keep the strait open through escort missions or military strikes.

Can Iran really close the strait?

Yes, at least temporarily. Iran has military capabilities including naval mines, fast-attack boats, anti-ship missiles, submarines and armed drones.

However, a complete, sustained closure would be difficult. The US Fifth Fleet and allied navies constantly patrol the area. Any attempt would provoke massive military retaliation. Moreover, Iran would also hurt its own oil exports, especially via overland routes and tankers.