Strait of Hormuz crisis is redrawing the global energy map

The Strait of Hormuz, a 39 km-wide waterway flanked by Iran to the north and Oman and the UAE to the south, is a passage through which one-fifth of the world’s oil flows each day. For decades, it has been a strategic chokepoint, considered a critical vulnerability in global energy security.

On Feb. 28, this vulnerability was laid bare when Iran’s Islamic Revolutionary Guard Corps issued a stark warning in the wake of US and Israeli strikes on Iranian nuclear facilities and the assassination of Supreme Leader Ali Khamenei. It said no vessels would be allowed to pass. Within days, tanker traffic plummeted by nearly 90 percent, oil prices spiked and the US navy swiftly mobilized to escort commercial ships through one of the world’s most perilous maritime corridors.

For the first time in history, the Strait of Hormuz was effectively closed. What followed was a permanent shift in the rules of global energy security, rewriting how energy is secured and traded in real time.

The most consequential lesson of the closure is financial. Iran did not mine the strait, nor did it deploy a naval armada. However, it struck three tankers in the vicinity of the passage and the insurance market did the rest. War-risk premiums for transits through the strait had already doubled before this, rising from 0.125 percent of ship value to between 0.2 percent and 0.4 percent, adding about $250,000 to each supertanker voyage.

Iran’s actions weaponized the insurance market and it was the market that effectively closed the strait

Zaid M. Belbagi

After the drone strikes, protection and indemnity insurance was withdrawn entirely, rendering transit commercially nonviable for most operators. Maersk, Hapag-Lloyd, MSC and CMA CGM, four of the five largest container lines in the world, suspended operations within 48 hours. No blockade was required, as Iran’s actions had weaponized the insurance market and it was the market that effectively closed the strait.

The scale of what flows through this narrow corridor makes its significance impossible to ignore. The Strait of Hormuz handles about 20.9 million barrels of oil per day, 27 percent of all seaborne crude oil, alongside 20 percent of global liquefied natural gas and a third of the world’s fertilizer shipments.

Saudi Arabia and the UAE can only partially rely on pipelines, with a capacity of about 2.6 million barrels per day — a mere fraction of what typically passes through the strait. All LNG, without exception, must travel by ship, with no pipeline alternative available. Last Tuesday, Iraq’s Rumaila oil field was forced to shut down due to the region’s storage capacity being exhausted. The same day, QatarEnergy suspended LNG production at Ras Laffan, effectively freezing an entire national economy. Within 72 hours, European natural gas prices surged from €30 ($34) to more than €60 per megawatt-hour and more than 3,000 ships were left stranded.

US President Donald Trump’s directive to deploy the US navy to escort commercial tankers and reopen the chokepoint marks a return to trade protection tactics not seen at this scale since the 1980s. During Operation Earnest Will in 1987 and 1988, about 450 commercial vessels were attacked amid the Iran-Iraq War, prompting the US to send naval escorts to keep the strait open.

The 2026 strategy is structurally similar. It is proposed that tankers would travel in convoys of two to six ships, escorted by Arleigh Burke-class destroyers and supported by mine-countermeasure vanguards and combat air patrols from two carrier strike groups operating 24/7.

The challenge, however, as the US navy has admitted, is that it lacks the immediate capacity to maintain full escort operations while engaging in active combat. Iran, on the other hand, still possesses an estimated 5,000 naval mines and 3,000 fast attack boats, asymmetric tools designed to target precisely this type of convoy system. As a result, the cost of safeguarding global energy trade is now permanently factored into the price of every barrel of Middle Eastern crude.

The impact of the disruption has been far from uniform. Iraq, which relies on the strait for 100 percent of its oil exports, had no choice but to shut down production entirely. Qatar, whose LNG-dependent economy was built on the assumption of seamless maritime access, is now facing an existential crisis. The CEO of Qatar Energy warned that the ongoing conflict could “bring down the economies of the world.”

The Asian economies most exposed, which are China, India, Japan and South Korea, rely on the Strait of Hormuz for 69 percent of their crude imports and have almost no alternatives for LNG. Within days, Goldman Sachs raised its second-quarter oil price forecast by $10 per barrel. Analysts at Bernstein warned that prices could surge to $150 per barrel in a prolonged disruption, describing the potential impact as three times the severity of the 1973 Arab oil embargo. As such, a prolonged closure of the strait would almost certainly trigger a global recession.

The winners in this crisis are few and the advantage to them is not immediate. Russia, however, does find itself with an unexpected windfall. With Asian buyers cut off from Gulf crude and few alternatives available, Russian oil, already discounted and routed through non-Western channels, gains commercial strength. Elsewhere, Atlantic producers such as Norway, the UK, Brazil, Guyana, Nigeria and Angola could use this crisis to secure a permanent competitive edge.

The US, now the world’s largest LNG exporter, benefits from shipping through Atlantic routes that are entirely unaffected by the turmoil in the Gulf. The Cape of Good Hope route, which adds about 15 days and $3 million to $5 million per voyage, has surged in use. Though longer and more expensive, it bypasses all Middle Eastern chokepoints, permanently complicating the calculation that once made the Gulf the default route.

The long-term impact may well be in achieving what three decades of climate diplomacy could not

Zaid M. Belbagi

This crisis has given a structural urgency to supply-chain shifts that had been discussed before. China last year announced an additional 200 gigawatts of solar capacity through 2027, explicitly framing it as an energy security measure rather than a climate ambition. India made an identical commitment with the same rationale.

Meanwhile, global corporate power purchase agreements exceeded 35 GW in 2025, with 60 percent concentrated in the Asia-Pacific, which is the region most exposed to disruption in the Gulf. The long-term impact of the crisis may well be in achieving what three decades of climate diplomacy could not. As such, the strategic case for energy independence has, for the first time, become politically undeniable.

The emerging shift in global energy geography is most evident along Africa’s western coast, where strategic infrastructure is being developed to bypass the Middle East’s vulnerable maritime chokepoints. Morocco’s Dakhla Atlantique port, currently under construction with a projected cost of up to $1.6 billion, exemplifies this trend. Designed to accommodate the world’s largest vessels, the port’s location on the open Atlantic Ocean makes it a critical asset in a rapidly changing energy landscape. This strategic advantage, which was once viewed as a long-term opportunity, has been accelerated by the 2026 crisis.

Similarly, the proposed Nigeria-Morocco Gas Pipeline, which will connect Nigerian gas fields to European markets through 13 West African nations, represents a $25 billion investment in a future in which Gulf energy supplies may no longer be as reliable. This project highlights a strategic shift in energy dynamics that anticipates a world increasingly dependent on alternatives to the volatile Strait of Hormuz.

While the Strait of Hormuz may eventually reopen and tanker traffic may resume, the global energy landscape is already undergoing a fundamental transformation. The militarization of energy trade, with its associated costs of naval escorts and continuous military presence, is now an inescapable reality. The effort to build resilient, chokepoint-free supply chains, once a long-term aspiration, has rapidly become an urgent strategic priority. This shift is no longer driven by environmental concerns but by the stark imperatives of national security. The geography of global energy has shifted and nations must now confront the challenge of navigating this new reality.

• Zaid M. Belbagi is a political commentator and an adviser to private clients between London and the Gulf Cooperation Council. X: @Moulay_Zaid