What If Iran Shuts Down the Strait of Hormuz? How Global Oil and Gas Flows Could Be Disrupted

Following the recent U.S. airstrikes on Iran's key nuclear facilities, speculation is rising that Tehran might retaliate by shutting down the Strait of Hormuz. This narrow chokepoint—only 21 miles wide at its narrowest—is responsible for nearly a quarter of the world's seaborne oil and a fifth of its liquefied natural gas (LNG) trade. Any disruption could send shockwaves through the global energy market.

A Strategic Lifeline Defined by Geography
The Strait of Hormuz lies between the Persian Gulf and the Gulf of Oman, bordered by Iran to the north and the UAE and Oman to the south. The shallow and narrow waterway makes ships vulnerable to mines, shore-based missiles, or interception, giving Iran significant control over it.

Who Relies Most on the Strait?
Around 16.5 million barrels of crude oil pass through the strait daily, exported from Saudi Arabia, Iraq, the UAE, Kuwait, and Iran itself. Iraq, Kuwait, Qatar, and Bahrain currently have no alternative export routes, making them highly vulnerable in case of a closure.

Though Saudi Arabia and the UAE have built pipelines bypassing the strait, these have limited capacity. Asian countries—especially China, India, and Japan—depend heavily on energy shipped via Hormuz, so a blockade would spike prices and trigger supply instability.

Would Iran Actually Shut It Down?
Iran has repeatedly threatened to close the strait during past standoffs but has never followed through. In both the 1980s "Tanker War" and during sanctions in 2011, Tehran opted for harassment over full blockade, avoiding extreme measures that could provoke military retaliation or harm its own oil exports.

Still, Iran's establishment of the Jask oil terminal at the eastern end of the strait shows it is preparing for a worst-case scenario by creating an alternative export point.

How Would the U.S. and Its Allies Respond?
To counter threats in the Strait of Hormuz, the U.S. has formed the International Maritime Security Construct with partners like the UK, Saudi Arabia, and Bahrain. Since 2019, U.S. forces have maintained a strong presence in the region, though attention has shifted more recently toward threats in the Red Sea and Bab el-Mandeb due to Houthi attacks.

Market Impact: Oil Prices and Investor Anxiety
A full blockade would likely cause oil prices to soar, disrupt global shipping, raise insurance costs, and trigger a flight to safe-haven assets like gold and U.S. Treasury bonds. Developing economies, which are more energy-dependent, would face especially acute financial pressure.