Explainer How important is the Strait of

Following the U.S.-Israeli military strikes against Iran that began on Saturday, global attention has turned to the Strait of Hormuz, particularly after Iran warned it could disrupt transit through this vital waterway in retaliation, sending shockwaves through international markets. What makes the strait so vital? Has this critical passageway ever been closed before?

Is a complete blockade feasible? Nestled between the Gulf and the Gulf of Oman, the strait serves as the only sea passage from the Gulf to the open ocean, cementing its status as one of the world’s most strategically vital chokepoints. Morgan, analysts warn that oil producers in the Middle East could sustain output for “no more than 25 days” if the Strait of Hormuz were completely shut.

Saudi Arabia, Iraq, Qatar, and the United Arab Emirates, alongside Iran itself, depend on this narrow passage to export their crude oil. Around 20 percent of global oil shipments pass through this critical strait. For liquefied natural gas (LNG), the stakes are equally high: Qatar, one of the world’s top three LNG exporters, moves nearly all its supply through the strait, accounting for roughly 20 percent of the global total.

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The U.S.-Israeli strikes on Iran have caused a dramatic surge in international oil prices. On March 1, Light Sweet Crude Oil futures for April delivery jumped 12.4 percent to 75.33 U.S. dollars per barrel on the New York Mercantile Exchange, while Brent Crude futures for May delivery surged 13 percent to 82.37 dollars on London’s ICE Futures Exchange.

Analysts warn that if the conflict persists, oil prices could skyrocket to 150 dollars per barrel. The ripple effects extend beyond crude. Freight and insurance costs are climbing as shipping giants, including Mediterranean Shipping Company (MSC), Maersk, CMA CGM, and Germany’s Hapag-Lloyd AG, divert vessels to seek safe harbors, suspend new bookings, and reroute schedules.

An analysis by The Economist cautions that tensions in the Strait of Hormuz could significantly inflate global energy transportation costs, with soaring insurance premiums as well as tankers forced to take the long way around the Cape of Good Hope. While the Strait of Hormuz has never been fully or permanently closed, every strategic tremor in the region has registered on global price charts. During the Iran-Iraq War (1980-1988), Iran repeatedly threatened to close the strait and laid mines in 1987, targeting oil tankers.

These operations pushed oil prices from over 30 dollars per barrel to more than 45 dollars, while tanker freight rates doubled. More recently, in July 2018, Iran detained a British oil tanker in the strait, sending oil prices slightly upward. The move came just two months after the United States withdrew from the Iran nuclear deal and reimposed sanctions.

In June 2025, after the U.S. strike against Iran’s nuclear facilities at Fordow, Natanz and Isfahan, Tehran’s parliamentary consensus to close the strait triggered a 6 percent jump in Brent Crude Oil prices.

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