Strategic Chokepoint: Why the Strait of Hormuz Could Shake the Global Economy

Global Oil Flows Through a Fragile Bottleneck

Every day, nearly 20% of the world’s oil exports pass through a single vulnerable corridor — the Strait of Hormuz — nestled along Iran’s southern edge. Destined for countries such as China, South Korea, and even the U.S., this narrow channel is critical for global energy markets. Yet, amid the backdrop of the ongoing Middle East conflict, it remains a potential flashpoint for economic turmoil.

Cease-Fire Between Iran and Israel Eases Tensions — For Now

Following recent U.S. strikes on Iran and retaliatory responses, global energy markets braced for impact. A temporary cease-fire between Israel and Iran eased fears on Monday, with oil prices dropping after President Trump’s announcement. However, markets remain on alert. At the height of the tension, several tankers reversed course mid-route, avoiding the Strait of Hormuz entirely.

Shipping Traffic and GPS Jamming Stir Security Fears

In the week preceding U.S. strikes, vessel traffic through the strait dropped by 14%, a significant deviation from the norm. Shipping companies have become more cautious — some halting operations entirely. GPS spoofing attacks, believed to originate from Iran, are disrupting the navigation of up to 1,000 vessels daily, according to maritime intelligence firm Windward.

Risks to Supply Chains and the Broader Energy Market

The Strait of Hormuz doesn’t just funnel crude oil — it also carries a fifth of the world’s liquefied natural gas (LNG), much of it bound for Asia. A blockage would significantly impact global supply and pricing, particularly in countries like China, Japan, and South Korea. Though alternative pipelines exist, they’re insufficient to replace lost tanker capacity.

Collision Highlights Strain on Maritime Operations

Just last week, two tankers collided near the strait due to navigational issues. The United Arab Emirates attributed the crash to faulty GPS — a stark illustration of how vulnerable the waterway is.

Geopolitical Fallout and Strategic Dependence

Any serious disruption in Hormuz would affect oil powerhouses such as Saudi Arabia, the UAE, and Qatar — and cripple Iran, which relies heavily on the strait for its own oil exports. Even Israel and Iran have reportedly targeted each other’s energy infrastructure, escalating concerns over the region’s long-term stability.

Asia’s Reliance, the World’s Problem

While Asia receives over 80% of the oil and LNG flowing through Hormuz, a disruption would send shockwaves across global markets due to oil’s universal pricing. Every consumer and business would feel the squeeze.