Iran Tightens Grip on Hormuz Strait Amidst Ongoing Conflict

The conflict involving Iran has significantly disrupted global energy markets, with a notable impact on the crucial Strait of Hormuz. What began as a potential short-term disruption is evolving into a more persistent challenge, as Iran asserts greater control over transit routes and the flow of oil and liquefied natural gas (LNG). This situation is raising concerns about inflationary pressures, potential delays in interest rate cuts, and volatility in global stock markets.

Strategic Importance of the Strait of Hormuz

The Strait of Hormuz is a narrow waterway connecting the Persian Gulf with the Arabian Sea and the Gulf of Oman. It is one of the world’s most strategically important chokepoints, facilitating the passage of approximately 20% of the world’s oil supply and 20% of the world’s LNG [1], [3]. In 2025, roughly 20 million barrels of oil and oil products transited the strait daily, equating to approximately $600 billion worth of energy trade annually [3]. Major oil and LNG producers, including Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the UAE, rely on this route to reach global markets.

Iran’s Control and Selective Transit

Over the past three days, Iran has been directing vessels linked to China, India, or those carrying agricultural products to Iran, or transporting Iranian energy commodities, through an IRGC-controlled corridor within Iranian territorial waters [1]. This selective transit policy effectively demonstrates Iran’s increasing control over the Strait. The strait has remained effectively closed for more than three weeks [1].

“Zombie” Vessels and Deceptive Shipping Practices

Recent transits have highlighted the use of deceptive shipping practices. A 26-year-classic LNG carrier, described as a “zombie vessel” – one that assumes the identity of a defunct ship – transited the Strait on March 20, signaling an unknown destination before disappearing from tracking systems [1]. This practice obscures the true origin and destination of the cargo, potentially circumventing sanctions.

Impact on Global Energy Markets

The disruption of traffic through the Strait of Hormuz has already led to soaring global fuel prices [3]. The conflict has effectively halted tanker traffic, impacting both oil and LNG flows [4]. This situation poses a significant risk to the global economy, exacerbating inflationary pressures and potentially hindering economic growth.

LNG and Fertilizer Trade Disruption

Approximately 20% of global LNG is shipped through the Strait of Hormuz, primarily from Qatar and the UAE [3]. The disruption also affects the trade of fertilizers, as the Middle East is a major exporter, with roughly one-third of the world’s fertilizer trade normally passing through the strait [3].

Looking Ahead

The situation in the Strait of Hormuz remains volatile and unpredictable. Continued disruption could lead to further increases in energy prices and broader economic consequences. Monitoring developments in the region and assessing the potential for alternative shipping routes will be crucial in mitigating the risks associated with this ongoing crisis.