The Strait of Hormuz and Iranian leverage on energy prices
The Strait of Hormuz and Iranian leverage on energy prices
MADRID – The United States and Israel’s war with Iran has extended into the Strait of Hormuz, transforming a regional military confrontation into a systemic economic rupture.
Following closure orders from Iran and subsequent attacks on oil tankers that defied those orders, shipping through the narrow waterway has slowed to a near standstill. Oil prices reacted immediately. What had long been treated as a strategic contingency has become an operational constraint.
Roughly one fifth of the oil consumed globally, alongside significant volumes of liquefied natural gas, normally passes through this corridor. The strait is not simply a commercial route. It is a structural hinge of the global energy system. For decades, uninterrupted transit was assumed to be guaranteed by an architecture led by the United States, even as that same architecture subjected Iran to sanctions, military encirclement and periodic open threats of regime change.
That arrangement relied on a fragile premise: that Iran would continue to underwrite a system designed to constrain it. The current disruption marks the exhaustion of that premise.
The geography of Hormuz has not changed. What has changed is the political context in which it operates. The escalation from indirect confrontation to open warfare alters the calculus for all actors. When a state is directly attacked, the distinction between economic normality and strategic leverage narrows. The strait ceases to be a neutral passage and becomes part of the conflict environment.
Energy sovereignty and asymmetric deterrence
Western commentary has tended to frame Iran’s actions as economically self-destructive, emphasising Tehran’s reliance on hydrocarbon revenues. This argument presumes that short-term revenue maximisation is the primary metric of rationality. It overlooks a different logic, one rooted in sovereignty under siege.
Iran’s strategic doctrine has evolved within conditions of sustained pressure. Sanctions have sought to curtail its financial system. Its nuclear programme has been subjected to external red lines. Its regional alliances have been portrayed as illegitimate extensions of influence. Military strikes, covert operations and cyberattacks have formed part of the landscape. In such an environment, deterrence cannot rely on conventional symmetry. It must rely on the leverage available.
Control over maritime traffic in Hormuz constitutes part of that leverage. It is not an improvisation of crisis but an embedded element of Iranian defence planning. Fast boats, drones and coastal missile systems were not assembled for symbolism. They reflect a doctrine designed to raise the cost of external coercion to levels that alter political calculations in adversary capitals.
The extension of war into Iranian territory changes the strategic equation. When military pressure escalates beyond containment, the activation of geographic leverage becomes a tool of signalling. The message is not merely regional. It is systemic. Any attempt to resolve the Iranian question through force will reverberate through energy markets and consumer economies far beyond the Persian Gulf.
Dependency, in this context, is reciprocal. Iran relies on export revenue. Importing states rely on the physical continuity of flows through a narrow maritime corridor. When approximately 20 per cent of seaborne oil transits waters adjacent to a sanctioned state, vulnerability is distributed, not concentrated. What is currently being priced in markets is the recognition of that shared exposure.
Sovereignty here is material rather than rhetorical. Iran oversees the Strait of Hormuz, a corridor essential to global energy supply. For years it has been asked to accept constraints on its strategic programmes while facilitating an energy order from which it was politically excluded. The present disruption signals that such an arrangement is not indefinitely sustainable.
This does not imply indifference to domestic cost. Iranian policymakers are acutely aware of economic pressures at home. Inflation and currency strain limit fiscal space. Yet strategic decisions in wartime are not made on the basis of quarterly revenue alone. They are made on the basis of relative cost. If restraint invites further escalation, controlled disruption may be judged the less damaging option.
The limits of containment
The United States has long positioned itself as guarantor of freedom of navigation in the Persian Gulf. Naval deployments and alliance structures were designed to insulate energy flows from regional conflict. The present crisis reveals the limits of that insulation. Maritime security cannot be reduced to patrols and escorts when the underlying political equilibrium has eroded.
The effort is no longer to contain a localised confrontation. The war is being extended beyond Iran’s borders, with the explicit goal of imposing costs on regional and extra-regional actors through disruption in economic and energy supply chains. Iran’s allies in Iraq and Lebanon, and soon in Yemen, are part of this broader strategy. By expanding the theatre of conflict, Tehran transforms local pressure into systemic leverage, forcing regional states and global markets to internalise the consequences of a war they had hoped to keep at arm’s length.
Scenario modelling by financial institutions assumes temporary interruption followed by stabilisation through strategic reserve releases and partial rerouting via Saudi and Emirati pipelines. Such projections are technically rigorous. They are also premised on the expectation that all actors ultimately prioritise rapid restoration of commercial normality.
War complicates that assumption. Iran’s objective is not to maximise disruption indefinitely but to assert leverage. By demonstrating that escalation carries systemic economic consequences, Tehran transforms the strait into an instrument of balance rather than a mere corridor for commerce.
For Persian Gulf monarchies, the episode underscores structural fragility. Their fiscal systems depend on stable exports, yet their security alignment with Washington situates them within the broader confrontation. Infrastructure that bypasses Hormuz mitigates but does not eliminate exposure. A prolonged regional war would threaten assets across multiple states. Their interest lies in de-escalation, though their capacity to broker it is constrained.
Asian importers confront a parallel dilemma. China, India, Japan and South Korea remain deeply dependent on Persian Gulf hydrocarbons. Diversification through Russian supply, Central Asian pipelines or expanded storage capacity provides partial relief but not immediate substitution. The concentration of flows through Hormuz is the product of decades of optimisation around cost efficiency. Reversing that concentration requires structural investment and time.
The longer the disruption persists, the stronger the incentive for systemic adjustment. Energy transition policies will increasingly be justified through security logic as well as climate objectives. Additional overland routes may be prioritised. Over time, such measures could reduce the strategic centrality of Hormuz. This introduces a paradox for Iran: the more frequently its leverage is activated, the stronger the incentive for others to dilute it.
The rational strategy from Tehran’s perspective is therefore calibrated pressure. Enough to enforce recognition of its strategic weight. Not enough to provoke irreversible realignment. Whether that calibration succeeds depends less on market elasticity than on political response.
At the core of the crisis lies a question that precedes tanker movements and price charts. Can a durable regional order be constructed while one of its principal states is treated as permanently subject to external redesign? The attempt to contain Iran while relying on geography it controls has reached a structural limit.
Expanding the scope and the future of energy markets
The present disruption is not merely a maritime or logistical problem; it is a mechanism for transferring the costs of conflict onto regional and global actors. Every attack, every interference with shipping or energy infrastructure, communicates that the stakes are systemic and that energy flows cannot be disentangled from geopolitical calculation.
The Strait of Hormuz, through which 20 percent of the world’s oil supply passes, has experienced a near-total slowdown in tanker traffic. Satellite navigation systems have been interfered with, insurance rates have surged, and vessel operators now define closure in terms of their own risk tolerance.
The market response has been immediate. Brent crude has approached $80 per barrel, U.S. gasoline has risen to $2.99 per gallon, and European LNG futures for April reached €45.46 ($53.26). Historical correlations indicate that a $10 per barrel rise in crude corresponds to roughly a 25-cent increase in U.S. pump prices, while a $15 per barrel rise could add 0.5 percentage points to European consumer prices.
Should the disruption persist, oil prices may breach $90 per barrel. Near-term volatility, episodic price spikes, and insurance shocks will shape trading, investment, and consumption. In the medium term, structural adjustments—expanded pipelines, energy transition investments, and diversification of import sources—will be dictated as much by security as by economics. Tehran’s leverage, exercised through the Strait of Hormuz, now anchors the global perception of risk and the practical limits of Western containment strategies.
The crisis marks a systemic inflection. Markets will respond, consumers will feel the impact, and states will recalibrate. The broader transformation lies in recognition: the material power of sovereignty, exercised through geography and strategic capability, remains a decisive variable in the global economy. The Strait of Hormuz is no longer a theoretical chokepoint; it is an instrument of leverage, a mirror of regional power dynamics, and a barometer of the strategic order that will shape the coming decade.
source: tehrantimes.com