Source: Supply Chain Digital
Date: 23rd June 2025

Mounting Tensions Spark Fears of Economic and Energy Disruption Worldwide

The possibility of the Strait of Hormuz being closed amid escalating conflict has sent shockwaves through global energy markets.

Following a significant incident on Iranian soil linked to nuclear activities, oil prices surged over 10%, reflecting growing uncertainty.

The Iranian parliament’s support for closing the strait — a vital artery through which 20% of the world’s oil passes daily — could lead to severe disruption in crude and liquefied natural gas shipments, with economic consequences across Asia, Europe, and beyond.

A closure of the strait, even temporarily, would jeopardise roughly US$1 billion in daily oil trade and impact nations heavily reliant on Middle Eastern energy. Countries like China, India, Japan, and South Korea import most of their oil and gas via Hormuz.

With over 80% of the Strait’s outbound volumes heading to Asia, the fallout from a blockage would be immediate and widespread.

Concerns have also risen around potential maritime threats, including electronic interference and the risk of mines obstructing shipping lanes.

Though alternative routes exist — such as pipelines through Saudi Arabia, the UAE, and Iran — their combined capacity falls far short of replacing Hormuz’s flow.

Maritime incidents and digital disruptions near key ports further compound the logistical challenges. While the U.S. has reduced its reliance on oil from the region, much of the world still depends heavily on this narrow corridor.

A closure could trigger diplomatic strain, reshape trade dynamics, and escalate global energy insecurity.