WHY IS THE STRAIT OF HORMUZ SO IMPORTANT?

The recent 12 day conflict between Israel and Iran raised global concerns over the possibility that Iran might close the Strait of Hormuz. The mere prospect of one country’s decision affecting the entire world has sparked a critical question: Why is the Strait of Hormuz so important, and why should everyone care? Let’s take a closer look.

The Strait of Hormuz connects the Persian Gulf to the Gulf of Oman and the Indian Ocean. It lies between Iran and Oman, with its narrowest point measuring approximately 33 to 38.9 kilometers wide. The waters of the strait are entirely within the territorial seas of Iran and Oman, meaning there are no international waters within the strait. Due to nearby islands, vessels must use designated 3-kilometer-wide lanes for inbound and outbound traffic, making secure navigation crucial. The U.S. Energy Information Administration (EIA) describes the Strait of Hormuz as “the world’s most important oil transit chokepoint,” underscoring its strategic significance.

The World’s Most Critical Oil Transit Route

In 2024, an average of 20 million barrels of oil per day passed through the Strait of Hormuz, accounting for nearly 20% of global oil consumption. Likewise, more than 20% of global liquefied natural gas (LNG) shipments also transited the strait. These figures alone demonstrate the immense strategic importance of the Strait. Experts estimate that a disruption in traffic through the Strait could drive up oil prices by $25 to $50 per barrel.

Major oil-exporting countries such as Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Iraq, and Iran all rely on the Strait of Hormuz. As shown on the map, most of these countries have no viable alternative routes. A significant portion of crude oil and refined products from the Persian Gulf can reach global markets only by passing through this narrow corridor.

China Would Be Most Affected

The primary recipients of the fossil fuels passing through the Strait are Asian countries like China, India, Japan, and South Korea, which together account for 70% of the total flow. According to the U.S. EIA, 84% of the crude oil and 83% of the LNG transiting the Strait in 2024 were destined for Asia.

From China’s perspective, the potential impact is especially significant, as 45% of its oil imports pass through the Strait. A complete halt in transit would likely increase transportation costs by 40%. Given Asia’s heavy dependence on the Strait for energy, price spikes could trigger a domino effect, with the shockwaves reverberating globally through China.

Following the Ukraine crisis, Europe has already seen a rise in energy prices. A crisis in the Strait of Hormuz would further exacerbate the situation for European countries.

Of course, some countries could benefit from such a scenario. Chief among them would be non-dependent oil producers like Russia.

A Brief Look at History

The Strait of Hormuz has long been a vital artery for global energy security, and there are few alternatives capable of handling such massive energy flows.

Its strategic importance is rooted in history. In the 16th century, the Portuguese and Ottomans clashed over control of trade routes in the region, with Hormuz Fort serving as a key military and commercial outpost. These historic struggles underscore the Strait’s enduring role as a focal point of global power dynamics.

Events such as the 1973 oil embargo, the 1979 Iranian Revolution, the 1980–1988 Iran-Iraq War (including the “Tanker War”), and the 1990–91 Gulf War have all highlighted the Strait’s geopolitical sensitivity and its direct impact on global energy markets. During the Tanker War, attacks on commercial vessels caused insurance rates to soar by 200% and increased oil prices by 25%. This illustrates the Strait’s volatility and its influence on the global economy.

Every major geopolitical tension involving the Strait has led to significant surges in global oil prices. However, despite numerous threats, the Strait has never been completely closed. This suggests that much of the market volatility is driven by “threat-based pricing.” In other words, even the possibility of closure is enough to trigger serious and immediate repercussions across global energy markets.

How Would Turkey Be Affected?

To put it bluntly: Turkey is not rich in energy resources, and energy imports represent the largest share of the country’s import expenses. Any increase in global energy prices directly harms the Turkish economy.

According to the Turkish Statistical Institute, Turkey spent $65.6 billion on energy in 2024. Although this represents a 5.1% decrease compared to $69.1 billion in 2023, energy imports still place a substantial burden on the national budget. While Turkey’s energy imports are not heavily dependent on the Strait of Hormuz an advantage in terms of supply security—sharp and sudden increases in energy prices could impose unmanageable financial costs