Iran Shuts Strait of Hormuz

The Strait of Hormuz is the world's most important oil chokepoint, with about 21 million barrels of oil passing through daily—equivalent to roughly 20% of global petroleum liquids consumption. The narrow waterway is also the only route to open ocean for about one-fifth of the world's liquefied natural gas (LNG) exports, primarily from Qatar. Historically, Iran has made numerous threats to close the strait, including notable instances in 2011 and 2019 amid rising tensions and sanctions, but has never fully sustained a blockade. During the "Tanker War" phase of the 1980s Iran-Iraq War, shipping was attacked, but the strait itself was never closed to all maritime traffic. A full closure would remove a volume of oil from the market five times larger than the disruption caused by the 1973 Arab Oil Embargo. Analysts project that a sustained disruption could cause crude prices to surge past $150 per barrel, significantly increasing the probability of a global recession. The impact would be most severe for Asian economies; China, India, Japan, and South Korea receive approximately 75% of the crude oil that transits the strait. For exporters, Saudi Arabia, the UAE, Kuwait, and Iraq would see their primary export route severed. While some alternative pipelines exist to bypass the strait, their total available capacity is estimated to be less than 4 million barrels per day. This is insufficient to compensate for the more than 20 million barrels that rely on the maritime route. The United States has previously declared that any attempt by Iran to close the strait would be a "red line" that would provoke an American military response. The US Navy's Fifth Fleet is based in nearby Bahrain, tasked with ensuring the free flow of commerce in the region.