How US-Israel Strikes on Iran Could Disrupt Global Oil Supply Through the Strait of Hormuz

Will Iran choke the global oil supply by closing the Strait of Hormuz? Recent U.S. military strikes on Iran’s nuclear facilities have underscored Tehran’s capacity to disrupt oil flows, especially through the strategically critical Strait of Hormuz.

While experts agree that a full blockade of the Strait lasting more than a few days is unlikely, such a move would drastically curtail oil shipments and could push prices up by nearly 70%, according to analysts at JPMorgan & Co., sparking inflationary pressures and slowing economic growth worldwide.

Though Iran has frequently threatened to close the Strait through which about 20% of the world’s daily oil supply transits, it retains various calibrated tactics to pressure its adversaries without jeopardizing key alliances, notably with China, its largest oil importer.

Tensions in the Middle East have reached a critical juncture as hostilities between Israel and Iran continue to escalate, pushing the region closer to a broader military confrontation. Over the past weekend, the conflict took a significant turn when the United States joined the fray, launching airstrikes on Iranian targets reportedly linked to nuclear weapons development. These strikes, aimed at crippling Iran’s strategic capabilities, mark a sharp intensification of the ongoing tit-for-tat exchanges between Israel and Iran, a rivalry that has long simmered through proxy wars but is now unfolding more directly and dangerously.

So far, there are no visible signs of de-escalation or diplomatic progress. Ceasefire negotiations have not been initiated publicly, and the tone from both Tehran and Jerusalem suggests a readiness for prolonged confrontation. The situation remains fluid and highly volatile, with analysts warning that miscalculations or further provocations could trigger a wider regional war involving Iran’s allies, such as Hezbollah and Houthi rebels, as well as increased U.S. military involvement.

One of the most pressing global concerns arising from the conflict is Iran’s threat to close the Strait of Hormuz, a narrow but vital maritime passage through which roughly 20% of the world’s liquefied natural gas (LNG) and 20–30% of global oil trade flows. The Strait serves as the primary exit point for energy exports from key Gulf nations, including Qatar, the United Arab Emirates, and Saudi Arabia. Any disruption to this chokepoint could have far-reaching implications for the global energy market.

While a full blockade remains unlikely due to both international deterrents and the economic self-harm it could cause Iran shipping industry experts and military analysts agree that even partial disruption or the perception of threat is enough to destabilize markets. Over the past few days, some shipping carriers have already begun rerouting vessels away from the Persian Gulf, citing increased operational risks due to the heightened military activity. Insurance premiums for tankers transiting the region have surged, and fuel prices have started to climb as traders brace for potential supply shocks.

In this deeply interconnected world, a regional conflict of this magnitude risks sparking a global economic ripple effect particularly in energy, trade logistics, and inflation just as the global economy attempts to recover from past disruptions.

Potential Impacts

As of late June 2025, maritime traffic remains active near the Strait of Hormuz, with approximately 105 vessels currently operating in the region, including tankers, container ships, and cargo vessels. However, the situation is growing increasingly unstable. Several ships, including two Chinese crude carriers, have recently altered their routes due to security threats, such as suspected GPS jamming and military activity near Bandar Abbas. The Iranian government has moved closer to enforcing a closure of the Strait following a vote in parliament on June 22, although no official blockade has been declared yet. Despite scepticism among global observers about a full shutdown, the potential risk alone has been enough to rattle energy markets and force changes in maritime operations.

The Strait of Hormuz is a critical maritime chokepoint, facilitating nearly 25% of the world’s oil exports and 20% of liquefied natural gas (LNG) trade. Any disruption here would significantly impact global supply chains, particularly for major exporters like Qatar, the UAE, and Saudi Arabia. While oil and LNG flows have not ceased, the perceived threat has led shipping firms to consider alternate routes and contingency planning. As a result, freight insurance premiums have surged, and shipowners are increasingly rerouting vessels around the Cape of Good Hope, adding significant transit time and operational costs.

In the heart of the Gulf logistics network, Jebel Ali Port in Dubai, the region’s largest and one of the busiest globally continues to operate, but under close scrutiny. Weekly activity includes a variety of vessels: container ships, bulk carriers, crude and LNG tankers, and Ro-Ro vessels that transport vehicles. Although port activity remains steady, a spike in container dwell time is anticipated if the Strait is closed or significantly restricted. This would particularly affect exports and transshipments, as containers may be unable to leave the port. As of April 2025, average vessel anchorage time at Jebel Ali had already risen to 1.7 days, up from much lower levels in 2024. Should the crisis escalate, this metric is expected to climb sharply, signalling broader congestion and delayed cargo movement.

The implications of a partial or full closure of Hormuz extend beyond the Gulf. If vessels are rerouted, many will be forced to dock at East African ports such as Mombasa or Dar es Salaam, which are not fully equipped to handle the volume and may quickly become overwhelmed. Meanwhile, rerouted shipments around the Cape of Good Hope could add 10 to 14 days to normal transit times, increasing shipping costs by 300–400% on some Asia–Europe lanes. These extended delays will ripple across supply chains, affecting delivery timelines for goods like electronics, automotive parts, perishables, and consumer products.

Globally, companies are beginning to brace for delays and surging costs. Port authorities and shipping lines are closely monitoring metrics such as vessel berthing times, daily vessel counts, and transit speeds. A noticeable drop from the current 105 vessels in the Gulf would indicate avoidance behaviour by shipping firms. Additionally, rising fuel prices and longer delivery times could reignite inflation in importing nations, just as many economies were recovering from earlier supply chain crises.

In summary, while a total blockade of the Strait of Hormuz has not occurred, the threat alone is disrupting maritime trade. Jebel Ali Port, a linchpin in regional and global trade, remains operational but vulnerable. If Iran follows through on its closure threats or military escalation persists, global logistics networks will suffer from heightened costs, increased delays, and long-term strategic shifts in supply chain routing.

Additional complications

Houthi attacks on commercial vessels in the Red Sea have caused a major disruption to one of the world’s most critical maritime corridors. As of June 2025, container ship transits through the Suez Canal have dropped by approximately 67% year-over-year, according to maritime traffic data. Shipping giants such as Maersk, MSC, Hapag-Lloyd, and CMA CGM have suspended Red Sea routes due to the high risk of missile and drone strikes, opting instead to reroute vessels around the Cape of Good Hope. This alternative route adds an average of 10 to 15 days to global transit times, creating significant delays and compounding logistics challenges across multiple continents.

The economic impact of these rerouted journeys is already being felt across the global supply chain. Freight rates for container shipping from Asia to Europe have risen by over 270%, driven by extended transit times, higher fuel usage, and rising insurance premiums. The cost of marine fuel (bunker fuel) has also increased by 7–8% since the beginning of June. The Suez Canal Authority has reported a substantial revenue decline, from $9.4 billion in 2023 to $7.2 billion in 2024–25, reflecting the sharp reduction in vessel traffic. Insurance premiums have surged, particularly for Israeli-linked vessels, with some carriers facing a 250% increase or even complete withdrawal of coverage.

In parallel, Iran’s recent parliamentary approval to close the Strait of Hormuz has heightened concerns of a broader energy supply crisis. Although the closure has not yet been enforced, the mere possibility has already sent shockwaves through global oil markets. The Strait of Hormuz handles approximately 18–19 million barrels of oil per day and nearly 20% of the world’s LNG shipments. Analysts at Goldman Sachs and other institutions warn that a prolonged closure could send Brent crude oil prices soaring past $100 per barrel, triggering inflationary pressure across major economies. The International Monetary Fund (IMF) and European Central Bank (ECB) have expressed concern about the potential consequences for global energy security and inflation control.

Meanwhile, Saudi Arabian ports though technically operational have seen their activity slow dramatically due to regional instability and rerouting of shipping lanes. Port throughput has declined as vessels avoid the Gulf region, further straining supply chains reliant on Middle Eastern exports. The convergence of Houthi maritime aggression, Iranian threats, and overall regional instability is severely affecting global trade flows.

These developments are collectively inflating transportation costs across all major shipping methods maritime, air freight, and overland trucking. As fuel prices rise and logistics delays mount, manufacturers and retailers around the world are bracing for shortages, cost increases, and delivery disruptions that could last well into the second half of 2025. The situation underscores the fragility of global supply chains in the face of geopolitical volatility and the importance of secure and stable trade routes.

Conclusion

In conclusion, the escalating conflict between Israel and Iran, compounded by the involvement of the United States and regional actors like the Houthis, has thrust the Middle East into a state of heightened instability with far-reaching global repercussions. The looming threat of a closure of the Strait of Hormuz, a vital artery for a significant portion of the world’s oil and LNG supply, poses an unprecedented risk to global energy security and trade. Meanwhile, disruptions in the Red Sea and the consequential rerouting of shipping traffic around the Cape of Good Hope have already led to soaring transportation costs, longer delivery times, and strained port operations across key maritime hubs like Jebel Ali and the Suez Canal.
These developments highlight the fragile nature of global supply chains and the interconnectedness of international trade routes. With rising fuel prices, increased insurance premiums, and port congestion becoming the new normal, businesses and economies worldwide face the dual challenges of managing inflationary pressures and ensuring the continuity of goods movement. As geopolitical tensions remain unresolved and the prospect of further escalation looms, global stakeholders must prioritize diversified supply chain strategies, enhanced maritime security, and diplomatic efforts to mitigate the profound economic risks emerging from this volatile region. Without swift resolution, the ongoing conflict threatens to deepen disruptions, drive up costs, and stall the fragile recovery of the global economy well into 2025 and beyond.