Amid massive anti-government protests in Iran and rising tensions with Western countries, the world is once again facing the threat of a major energy crisis. Global crude oil prices could rise above $110 a barrel if Iran retaliates by blocking the Strait of Hormuz, strategic experts have warned. The Strait of Hormuz, located between Iran and Oman, is one of the most important sea lanes in the world. It connects the Persian Gulf to the Arabian Sea. As the world’s most important oil chokepoint, it carries about one-fifth of the world’s oil supply and large quantities of liquefied natural gas (LNG).
This narrow sea route is the lifeline of the world
Iran is blaming America and Israel for the anti-government protests. There are fears that Iran may target the Strait of Hormuz in retaliation. To do this, it can disrupt this route by laying sea mines, launching missile and drone strikes, or adopting tactics to harass ships. Any blockage in this waterway will have a direct impact on global energy markets and create turmoil, which could cause oil prices to skyrocket.
Tension has increased significantly in Iran amid reports of thousands of deaths, internet shutdown and unrest in several provinces during the crackdown on protesters. Meanwhile, US President Donald Trump has threatened strong military action against the Iranian regime’s crackdown on protesters. This aggressive rhetoric has further increased fears that Iran may try to close the Strait of Hormuz. It is worth noting that Tehran made a similar threat following Israeli-US air strikes last June. Although experts believe that given the strength of the US Navy, Iran will not be able to completely block the strait for a long time, but even a short-term blockage could cause a huge surge in oil prices, leading to global inflation and major market fluctuations.
What is the Strait of Hormuz and why is it so important?
The Strait of Hormuz is one of the most important sea routes in the world. Located north of Iran and south of Oman and the United Arab Emirates (UAE), it connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. It is the only sea route for oil and gas from the Gulf countries to reach international markets. At its narrowest point, it is only about 33 kilometers wide, and the lanes designated for ships are only a few kilometers wide. Despite this, about 20 percent of the oil used worldwide every day, as well as large quantities of LNG, passes through this route. In 2025, about 13 million barrels of crude oil will pass through the strait every day, accounting for about 31 percent of global seaborne oil trade.
Its impact on the world economy will increase India’s concern.
Major oil producing countries like Saudi Arabia, Iraq, Iran, Kuwait and UAE depend on this route to export their energy supplies, especially to Asian markets. For countries like China, Japan, India and South Korea, which use about 80 percent of the oil, condensate and LNG passing through this route, the stability of the Strait of Hormuz is directly linked to their economic security.
Could Iran close the Strait of Hormuz?
According to Daniel E. Mountain, writing for the Atlantic Council, a US-based think tank, Iran could at least disrupt commercial shipping through this waterway. US intelligence agencies estimate that Iran has 5,000 to 6,000 naval mines, which it can rapidly deploy using its 25 submarines. Even the threat of laying a mine can stop commercial traffic within days.
Additionally, Iran has a strong network of anti-ship missiles for coastal defense. These include Khaleej-e Fars ballistic missile, Hormuz-1 and Hormuz-2 missiles, and Noor cruise missile. Iran also has thousands of drones, including domestically produced and Russian-designed Martyr-class drones, which were previously used by Houthi rebels to disrupt shipping in the Red Sea.
However, Mounton believes that given the superior strength of the US Navy, it would be very difficult for Iran to completely and permanently close the strait. In 1988, when Iran last tried to lay mines in the area, the US caused heavy damage to the Iranian Navy through Operation Praying Mantis.
Could Iran set global oil prices on fire?
According to Forbes, about 30 percent of the world’s seaborne oil trade and a third of liquefied petroleum gas shipments pass through the Strait of Hormuz, with more than 80 percent of that going to Asian countries such as China, Japan, India and South Korea. Any attempt to close this route will have immediate and massive impacts. According to CNBC, a complete shutdown could increase oil prices by $10 to $20 per barrel. A Forbes report citing Goldman Sachs said that if oil flows were halved even for a month, prices could rise by nearly 30 percent, topping $110 a barrel. BBC has also warned that this could cause turmoil in the stock markets and increase inflation in countries like China and India. Citigroup also estimated that a prolonged disruption could push oil prices closer to $90 a barrel.