The prospect of disruption in the Strait of Hormuz is becoming increasingly likely, according to Yiannis Parganas, Head of the Research Department at Intermodal. Iran’s threats to potentially close the strait pose a significant risk by jeopardizing approximately one-fifth of the world’s oil and LNG flows. However, such a blockade could be detrimental to Iran itself, as it heavily relies on this passage for exporting over 1.6 million barrels per day of crude oil, mainly to China, and over 80% of its overall cargo traffic. This situation becomes even more complicated given the positions of Iran’s diplomatic partners like Qatar and China, which are also vulnerable to disruptions in Hormuz.
Qatar, for instance, exports around 81 million tons of LNG annually—accounting for about 21% of global trade—and almost all of it passes through Hormuz. Disruption could create supply shortages in Asia, raising prices and destabilizing markets. In 2024, more than a quarter of China’s LNG imports traveled through this route, making it critically dependent on uninterrupted access. China, as the world’s largest crude importer, with approximately 11.1 million barrels per day required, is comprehensively reliant on Middle Eastern suppliers, including Iran.
Any temporary embargo affecting the Strait could severely impact China’s refinery operations, pushing them toward the expensive spot market. Although Iran’s threat may currently be seen as strategic posturing, the maritime shipping industry is already feeling the effects. Increased insurance premiums and shipping rates are being passed on to consumers. Major operators, like Frontline, have suspended contracts through the strait to ensure safety, while the deployment of tug resources following a tanker collision has heightened risk perceptions.
In summary, even if a complete closure remains unlikely, partial disruptions or threats can severely affect local economies, leading to higher costs for freight and energy. As a result, while Iran may threaten its critical allies, any actions taken could ultimately harm its own economy. The very threat of disruption is enough to inject significant instability into global logistics and energy transportation systems.