For most of the 21st century, the Strait of Hormuz, while globally important, was little more than a stretch of water in the minds of billions worldwide.
That all changed at the end of February this year, when the United States and Israel launched a major attack on Iran.
Tehran, unable to mount a military response of comparable scale, declared the Strait of Hormuz closed.
It’s remained that way ever since.
Despite brief moments of optimism that the strait would be reopened, no meaningful agreement has sufficed. Traffic remains more than 90% below pre-war levels, and oil prices have regularly spiked above $100 per barrel.
Yet, oil prices are once again falling, and Iran’s long closure is hurting its own economy. It begs the question: has Tehran’s economic leverage peaked?
Context of the Strait
For centuries, commercial shipping has passed through the Strait of Hormuz without let or hindrance.
Bordered by Iran to the north and Oman to the south, the strait provides Gulf nations such as Qatar, Kuwait, the United Arab Emirates and Bahrain with an easy route to export oil worldwide.
At its narrowest, the strait is 24 miles wide – well within range of Iran’s missiles. But until the war began in February this year, Iran had no reason to target non-military vessels which sought passage.
In the immediate aftermath of Operation Epic Fury, Iran closed the Strait of Hormuz, effectively prohibiting commercial vessels from passing through in either direction.
The mass bombardment soon ceased, but the shipping lane has remained closed ever since as U.S. President Donald Trump increasingly targets Tehran through economic sanctions, rather than the major bombardment seen in the war’s first six weeks.
Battered militarily, Iran’s main leverage has been its ability to effectively close the Strait of Hormuz.
Not only have the knock-on effects been felt in Gulf states that rely on vessels transiting through, but also across the world, as oil prices remain well above pre-war levels.
The Worst Still to Come?
The shock of the war and closure of the strait spiked oil prices earlier this year amid great uncertainty.
Since then, prices have peaked and troughed, rising once again earlier in September following a renewed offensive by Houthi rebels in Yemen towards the Bab al-Mandeb Strait – Saudi Arabia’s alternative shipping route for oil exports.
A drone strike by Iranian-backed militias in Iraq raised further market concerns over global oil supply after Riyadh’s East-West pipeline – constructed during historical concerns over the Strait of Hormuz in the 1980s – was forced to close as a result of the attack. With the Houthis threatening commercial shipping in the Red Sea, there remains a distinct possibility that Iran’s prolonged closure is working as intended.
Alternative Solutions
Yet nearly seven months after the strait’s closure, oil exporters are adapting.
While the Saudi pipeline remains closed for another few weeks, the actual loss of oil has been relatively low during the conflict.
Saudi Arabia and the UAE have rerouted oil to bypass the strait – the latter via the Habshan-Fujairah pipeline, which can carry up to 1.8 million barrels a day.
While Saudi Arabia is considering expanding its current pipeline upon reopening, the UAE is building another.
Due for completion by next year, the new pipeline will double the UAE’s export capacity. There are also discussions to accelerate a recently approved pipeline in Iraq through an ambitious route to Jordan, while the United States is reportedly backing efforts to revive an Iraq-Syria pipeline that has been shut since the Iraq war.
The shipping industry itself is also adapting. Supertanker orders so far this year have already doubled that of 2025 in a buying spree worth more than $20 billion as the war redraws trade routes and increases demand for long-haul shipments.
Iran’s Economy is Faltering
Tehran, under a U.S. naval blockade and ongoing sanctions, is struggling with its own economic issues. Consumer prices are up 90% year on year, food inflation has reached 130%, while unemployment is increasing.
There’s debate over whether the country is on the brink of economic collapse, but questions nevertheless remain over how long Iran can hold on.
Ultimately, whether Iran’s leverage over the Strait of Hormuz remains to be seen.
There’s a very real threat that the Houthis could cause further disruption to oil exports, and major infrastructure projects are either under repair or due for completion next year. However, uncertainty over what to do if the strait closes has vanished, and with buyers seeking alternatives, Iran’s influence is limited outside the Persian Gulf.
If Tehran’s leverage hasn’t peaked yet, it might very well do so soon.
About the Author: Shay Bottomley
Shay Bottomley is a British journalist. He has written for the Western Standard, Business Insider, Maidenhead Advertiser, Slough Express, Windsor Express, Berkshire Live and Southend Echo.
