The Strait of Hormuz, the center of global trade, the consequences the world will face in the long term

The Strait of Hormuz had never been closed before not for such a long period and not to such an extent close to a total blockade of maritime traffic. Such a situation did not occur even during the two major oil crises of the last century, including the one linked to the Iranian Revolution of 1979. It did not happen even in the final years of the long conflict between Baghdad and Tehran, when both sides were involved in what history knows as the “tanker war.”

Hundreds of ships were targeted during that period: Iraq attacked Iranian tankers, while Iran struck vessels belonging to Saddam Hussein’s regime, as well as those of Kuwait or Saudi Arabia. In 1987, the United States intervened under the administration of President Ronald Reagan to protect ships and guarantee maritime circulation.

Even during the most recent tensions in the region, when the Iranian leadership has often threatened to close the strait, Hormuz was not blocked. Not even during the twelve-day war last June, when for the first time American aircraft bombed facilities linked to Iran’s nuclear program.

Now the situation has changed.

The strait is practically closed to about 90% of its traffic. Based on the average number of normal passages, over the past six days around 500 ships gas tankers, oil tankers, cargo ships, or vehicle carriers should have passed through this maritime corridor.

Satellite images show hundreds of ships gathered near the ports of Oman, the United Arab Emirates, Saudi Arabia, Kuwait, and Qatar, as well as several near Bandar Abbas in Iran. About two-thirds of them would be transporting energy to global markets: gas from Doha to China or refined products from Saudi refineries to Rotterdam.

The Strait of Hormuz is one of the most important hubs of energy transport in the world. About one-fifth of the oil and liquefied natural gas traded globally passes through it.

According to data from the International Monetary Fund, in 2025 around 34,000 ship transits were recorded in this strait, ranking it eighth in the world by number of crossings. Nevertheless, it is considered the most sensitive point for the effects that any crisis in its waters could spread to the international economy.

The strait takes its name from a small island opposite the Iranian port of Bandar Abbas. At its narrowest point it is about 33 kilometers wide, between the Arabian Peninsula in the south (Omani territory) and the Iranian coast in the north.

However, the navigable areas are even more limited due to shallow waters and very strict navigation rules. Traffic moves through two separate corridors: one for entry into the Persian Gulf and one for exit from it, each about 3.7 kilometers wide and separated by a central buffer zone to prevent collisions between tankers.

The development that led to the current blockade also shows the fragility of the international economic system. In fact, the closure was not caused directly by Tehran.

Although Iran’s Revolutionary Guard warned on Monday that no one should pass through those waters, threatening attacks on ships, and even struck about ten vessels with drones or missiles including the tanker “Skylight” flying the Palau flag and “Athe Nova” flying the Honduran flag traffic had effectively stopped earlier for economic reasons.

Since the start of the Israeli-American operation on Saturday, the risk of incidents in the strait has risen so much that tanker charter rates and insurance have become almost unaffordable.

According to Arctic Securities Research, the daily cost of chartering a large tanker carrying about 300,000 tons of oil has risen from around $50,000 for most of 2025 to about $480,000 today. Meanwhile, insurance against incidents for ships and crews has increased from around $1,000 per day to about $100,000 just for this route.

In practice, the financial system and maritime services have pushed traffic in Hormuz to the point Tehran had sought: paralysis.

In this context, former U.S. President Donald Trump announced Tuesday evening that the possibility of creating a system of military escorts for ships was being considered, as well as a low-cost public insurance scheme.

However, it remains unclear how effective such a measure could be. Under normal conditions, around 60 oil and gas tankers pass through Hormuz every day far too many to all be escorted.

Recent experience at another strategic chokepoint, the Bab el-Mandeb Strait at the entrance to the Red Sea from the Gulf of Aden, shows the limits of such measures. Since the beginning of 2024, Yemen’s Houthi rebels have caused about a two-thirds drop in traffic toward the Suez Canal simply by attacking a few ships.

Despite military operations and bombings by European and American forces, traffic has not returned to previous levels. In the Red Sea, the calculation of risk and costs for shipping companies has changed permanently.

Experts warn that the same could happen with the Strait of Hormuz. Even after the weapons fall silent, the economic consequences could last for a long time, creating another barrier in the global economy.

“KORÇA BOOM”