It looks like the Strait of Hormuz may be at risk again amidst escalating tensions in Iran. Industry experts cautioned that a military confrontation could provoke Iran to choke off the Strait of Hormuz, a narrow waterway that connects the Persian Gulf and the Arabian Sea and through which nearly a third of the world’s seaborne crude flows.
“The fear of a closure will cause the price of oil to rise a few dollars per barrel, but it is the complete closure of the Strait that can result in a $10 to $20 per barrel spike,” said Andy Lipow, president of Lipow Oil Associates.
“A disruption through the Strait of Hormuz could cause a global oil and gas crisis” especially when considering the “desperate and ill advised lengths the current Iranian regime may go to” should they find themselves increasingly backed into a corner with their power and lives at stake, said Saul Kavonic, head of energy research at MST Marquee.
READ: Trump wants to annex the Panama Canal, appoints new ambassador. Do alternate routes exist? (December 24, 2024)
As tensions between the United States and Iran resurface in 2026, the Strait of Hormuz has once again become a focal point of global strategic and economic concern. Any disruption there would ripple quickly through energy markets, inflation expectations, and global growth.
The prospect of U.S. military intervention, whether through direct strikes, expanded naval deployments, or support for regional allies, raises the risk that Tehran could respond asymmetrically. Iran has long viewed the Strait of Hormuz as a key leverage point. While a full closure would be difficult to sustain given U.S. and allied naval capabilities, Iran could pursue options short of an outright blockade, including harassment of commercial shipping, mining operations, drone and missile threats, or proxy attacks that raise insurance costs and deter transit.
Even limited disruptions could have outsized effects. Energy markets are highly sensitive to uncertainty, and prices often react sharply to perceived risk rather than actual supply losses. Sustained price spikes would likely feed into transportation, food, and manufacturing costs worldwide, complicating monetary policy and straining economies already grappling with geopolitical fragmentation.
For Washington and its partners, the challenge lies in deterring Iranian escalation while avoiding actions that inadvertently trigger it. Freedom of navigation operations, multinational naval patrols, and diplomatic engagement with Gulf states all play a role in managing risk. At the same time, the renewed focus on Hormuz underscores a longer-term reality: global dependence on a handful of energy chokepoints remains a strategic vulnerability. Until diversification of supply routes and energy sources accelerates, the Strait of Hormuz will continue to loom large whenever US–Iran tensions flare.
Even without concrete action, heightened tensions may be enough to unsettle markets, influence investor sentiment, and expose the fragility of international supply chains. The situation underscores the enduring power of geopolitical leverage in an energy-dependent world, where strategic waterways can amplify the consequences of political and military decisions far beyond their immediate geography.
For policymakers and markets alike, the episode serves as a reminder that managing risk is as much about preventing escalation as it is about responding to crises after they occur.
Over the longer term, persistent vulnerability to disruptions in key transit routes reinforces the importance of resilience, including diplomacy, coordination among major powers, and gradual shifts in energy infrastructure. Until such vulnerabilities are reduced, periods of heightened tension are likely to continue carrying global repercussions disproportionate to events on the ground.