US–Iran tensions: Why the Strait of Hormuz Matters to the Global Economy

The Strait of Hormuz is one of the most important waterways in the world. It links the Persian Gulf to the Gulf of Oman and then to the Arabian Sea. Even though it is narrow, it carries a huge share of the world’s oil and gas exports, making it a key route for global energy supply.

The strait is about 104 miles, or 167 kilometres, long. At its narrowest point, it is only about 20 miles, or 33 kilometres, wide. The actual shipping lanes used by vessels are much tighter, measuring around 2 miles (3 kilometres) in each direction. This means a large amount of global trade moves through a very small space.

Where the Strait of Hormuz is located

Commercial ships usually pass through the Traffic Separation Scheme near the Musandam Peninsula. There is also an Inshore Traffic Zone south of the Omani island of Didimar, where the water is deep enough for large vessels. Although this zone is primarily intended for smaller craft under normal conditions, it was once the main route through the strait before 1979.

The Strait of Hormuz lies between Iran to the north and the Musandam Peninsula to the south, which is shared by Oman and the United Arab Emirates. Its location has made it important for trade for centuries. Today, its role is even greater because it is central to the global oil and gas market.

Why the Strait is critical to global oil and gas supply

The Strait is especially important because it handles a major share of the world’s energy trade. Around 20 million barrels of crude oil pass through it every day. This is roughly one-fifth of global oil production. It also carries a significant share of the world’s liquefied natural gas shipments. Major Gulf producers such as Saudi Arabia and Kuwait depend on this route to send oil to customers in Asia, Europe, and other parts of the world.

Because there are very few alternative routes, any disruption in the Strait of Hormuz can quickly affect international energy markets. Even a small delay can increase shipping costs, raise insurance premiums, and push oil prices higher.

Who controls the Strait of Hormuz?

Iran has influence over the northern side of the strait, while Oman controls the southern side. Over the years, Iran has repeatedly threatened to close the waterway during periods of tension. Although the strait has never been shut for a long period in modern times, the threat of disruption has remained a major concern for governments, traders, and energy markets.

During Iran’s 12 day conflict with Israel in 2025, analysts warned that oil prices could rise above 100 dollars per barrel if the strait was blocked. Those warnings showed just how sensitive global markets are to security risks in the area.

Recent tensions and shipping disruptions in 2026

Recent tensions in 2026 have once again brought the Strait of Hormuz into focus. Reports of attacks on tankers and increased security threats have caused some vessels to avoid the route. Even without an official closure, the risks alone have disrupted traffic and delayed shipments.

Some liquefied natural gas carriers from Qatar were forced to reroute or pause their journeys. This included vessels linked to major energy companies, underlining how quickly instability in the strait can affect global supply chains. The result has been higher concern in energy markets and renewed fears about oil and gas prices.

Could Iran close the Strait of Hormuz

Many experts believe Iran would only fully shut the Strait as a last option. A total closure would also hurt Iran, since it would damage its own oil exports and trade. That makes a complete shutdown less likely, but it does not remove the danger.

Smaller actions can still have serious global effects. These may include interfering with navigation signals, detaining ships, or placing sea mines in key waters. Such steps may not amount to a full closure, but they can still slow traffic, raise freight costs, and increase energy prices around the world.

Why the world keeps watching the strait

The Strait of Hormuz may be a narrow passage, but its global importance is enormous. It remains one of the most sensitive points in the international energy system. When tensions rise there, the impact is felt far beyond the Middle East, from shipping markets to fuel prices in countries across the world.

In the end, the significance of the Strait of Hormuz goes beyond geography. It sits at the centre of energy security, trade, and regional power politics. That is why every threat, every attack, and every sign of disruption in the Strait is closely watched by the world.