How Severe Would the Consequences Be If the Strait of Hormuz Were Fully Closed?

A JPMorgan analyst recently did a math problem in the latest report: dividing the onshore and offshore crude oil storage capacity of Middle Eastern oil-producing countries by their daily production capacity. The conclusion of this calculation is that if the Strait of Hormuz were completely closed, these oil-producing countries would have to stop production after continuously producing for 25 days, as they would be unable to transport the oil out.

The Strait of Hormuz, which connects the Persian Gulf and the Gulf of Oman, is a global strategic chokepoint. After the United States and Israel launched a military strike on Iran on February 28, the passage through the strait has come under the attention of all parties, especially as Iran's statement that it would "block" the strait has caused widespread panic. How important is the Strait of Hormuz? How would obstructed passage through this strait impact the world economy? Is Iran capable of "blocking" this strait?

How does “obstruction” affect geometry?

Apart from Iran, major oil producers such as Saudi Arabia, Iraq, Qatar, and the UAE all export their crude oil through the Strait of Hormuz. The crude oil transported through this strait accounts for about one-fifth of the world's total oil transportation. As one of the world's top three LNG exporters, Qatar ships almost all of its LNG through the Strait of Hormuz, accounting for about 20% of the global supply.

Following the U.S.-Israeli strikes on Iran, international oil prices surged sharply. On the New York Mercantile Exchange, the April-delivery light crude oil futures contract rose as much as 12.4% on the 1st, reaching $75.33 per barrel; the May-delivery London Brent crude oil futures contract rose as much as 13%, reaching $82.37 per barrel. Analysts forecast that if the conflict persists, crude oil prices could climb as high as $150 per barrel.

Oil prices are rising, and so are freight and insurance costs.

Global shipping giants active in this strait region—including MSC, Maersk, CMA CGM, and Hapag-Lloyd—have recently taken measures, instructing vessels to divert to safe areas, suspending new bookings, and adjusting routes and schedules. Meanwhile, numerous cargo and oil tankers have rerouted via the Cape of Good Hope to avoid the Suez Canal.

The Economist analysis states that tensions in the Strait of Hormuz would significantly raise global energy transportation costs—merely due to soaring insurance premiums and oil tankers rerouting around the Cape of Good Hope.

Have you ever "closed" it before?

Historically, the Strait of Hormuz has never been completely and permanently closed, but every strategic confrontation over this region has directly impacted international oil prices and the global economy.

During the Iran-Iraq War from 1980 to 1988, Iran repeatedly threatened to blockade the Strait of Hormuz and, in 1987, laid mines and attacked oil tankers in the area. At the time, tanker crews referred to the strait as the "death corridor." Iran's threats caused oil prices to rise from over $30 per barrel to more than $45 per barrel.

Meanwhile, tanker freight rates have also risen due to heightened tensions in the strait, doubling at their peak.

In 2018, the U.S. government withdrew from the Iran nuclear deal and reinstated sanctions on Iran. Iran then stated that it had the capability to disrupt oil shipments through the Strait of Hormuz. In July of that year, Iran seized a British tanker in the Strait of Hormuz. The tensions at the time led to a slight increase in oil prices.

In June 2025, the U.S. claimed to have "successfully struck" three Iranian nuclear facilities in Fordow, Natanz, and Isfahan. Iranian officials later stated that the Iranian parliament had reached a consensus on "closing the Strait of Hormuz." Following the announcement, the price of London Brent crude oil rose by 6% at one point.

Can it really be "blocked"?

Thanks to its unique geographical location, the Strait of Hormuz has long been a critical site for strategic deterrence by various parties. Although Iran has repeatedly threatened to "block" the strait over the years, can this vital artery for crude oil transportation truly be shut down?

For Iran, "blockading" the strait involves considering both "whether it is willing" and "whether it is capable".

Some analysts believe that Iran has long avoided blocking the Strait of Hormuz because its own crude oil exports also pass through this waterway; closing the strait would effectively cut off a vital source of its fiscal revenue. Additionally, military experts note that the simplest way for Iran to sustain a long-term, complete blockade of the Strait of Hormuz would be to continuously lay naval mines in the area—but this would be extremely difficult and would also invite external military retaliation.

Moreover, the Strait of Hormuz, as a vital energy corridor, has drawn extensive international attention. Iran must also consider avoiding confrontation with the numerous countries that rely on this energy passage.

According to Japan Broadcasting Corporation, since Japan imports 90% of its crude oil from the Middle East, if the Strait of Hormuz were to be blockaded for a long period, the Japanese economy would suffer a "fatal blow," and the GDP could decrease by 3%.

Comprehensive analysis from various sources suggests that the Strait of Hormuz may not remain fully closed for an extended period; however, the current tense situation is likely to persist, adding further uncertainty to global energy transportation and economic development.