The Strait of Hormuz: The Most Dangerous Chokepoint in the Global Economy

The world runs on oil. And oil runs through Hormuz.

The Israel-Iran conflict isn’t just a war of missiles; it’s an oil war. At the heart of this crisis lies the Strait of Hormuz, a narrow sea lane between Iran and Oman, just 21 miles wide at its narrowest point. It connects the Persian Gulf to the Arabian Sea and the Indian Ocean.

Through this chokepoint flows nearly 30% of the world’s seaborne oil. If this lifeline is blocked, it’s not just oil prices that surge; it’s inflation, freight costs, interest rates, and global financial stability that come under threat.

Let’s break it down.

Here is a Middle East Oil Production & Export Snapshot (2025) (Mb/d= Million Barrels per day)

Country	Production (Mb/d)	Exports (Mb/d)
Saudi Arabia	9.0	7.5–8.0
Iraq	4.0	3.5–3.8
Iran	3.3	2.0
UAE (Murban)	2.9	1.7
Others (Kuwait, Oman, Qatar)	2.0	1.8–2.0
Total	~21	~18

The total seaborne oil exports through the Strait of Hormuz are approximately 18–20 million barrels per day (Mb/d). It also handles liquefied natural gas (LNG), especially from Qatar, making it even more critical.

Who's Most Dependent?

Oil Import Dependency on the Middle East (2025)

Region / Country	Total Crude Oil Imports (Mb/d)	Imports from Middle East (Mb/d)	% Share from Middle East
India	5.0	2.7	53%
China	11.1	7–8	63%
USA	5.8	0.45	7%
Europe	10.5	3.0	30%

An important aspect is often overlooked. The U.S. is not heavily dependent on Middle Eastern oil. If the Strait of Hormuz is disrupted, U.S. markets may feel a price shock, but not a supply shock. Meanwhile, Asia and Europe will bear the brunt of physical shortages, making them more vulnerable to prolonged instability. This low reliance gives the U.S. greater geopolitical flexibility. Hence, the U.S. can act militarily or diplomatically without an immediate threat to its energy security.

What Happens If Hormuz Is Hit?

Alternate Oil Export Routes to the Strait of Hormuz

Route / Pipeline	Country	Capacity (Mb/d)
East–West Pipeline (Petroline)	Saudi Arabia	~5.0
ADCOP Pipeline (Abu Dhabi Crude Oil Pipeline)	UAE	~1.5
Iraq-Turkey (Kirkuk–Ceyhan) Pipeline	Iraq, Turkey	~1.0

While the total theoretical alternate capacity is ~8 Mb/d, actual operational capacity is closer to 5.6–6.0 Mb/d due to disruptions and logistical constraints, leaving a ~12–13.5 Mb/d gap if Hormuz is blocked.

• Current Operational Rerouting: ~5.6–6.0 Mb/d

• Middle East Total Seaborne Exports via Hormuz: ~18–20 Mb/d

• Gap If Hormuz Blocked: ~12–13.5 Mb/d

Strategic Insight

• Even with maximum use of alternate pipelines, only ~30–35% of the region's oil exports can be rerouted.

• The rest must go via longer maritime paths (e.g. around the Cape of Good Hope) — adding 10–14 days and sharply increasing costs.

• In a crisis, spare capacity from OPEC+ and strategic reserves become the only near-term buffers.

The Economic Impact

• Brent Crude could jump past $100/barrel

• Global inflation spikes — food, fuel, freight all rise

• Central banks may delay or reverse rate cuts

• Currencies of oil-importing nations weaken

• Gold rallies; equities fall; volatility spikes

Concluding Thought:

The world runs on oil, and oil runs through Hormuz. That’s not just geopolitics. That’s global vulnerability. The Strait of Hormuz may seem like a narrow strip of water in a distant part of the world, but it holds immense power over the global economy. With nearly 30% of the world’s seaborne oil passing through it daily, the escalating tensions between Israel and Iran carry implications far beyond geopolitics. A disruption here doesn’t just spike oil prices; it can fuel inflation, shift central bank policies, tighten interest rates, and shake investor confidence across the globe. 

A narrow strait now holds wide-reaching consequences. What unfolds next could shape the global order.