Since active warfare began against Iran in late February, traffic through the Strait of Hormuz has ground to a halt. Oil tankers have sat idle as the threat of Iranian drones, gunboats and missiles caused shipping costs to surge, and governments around the world scrambled to stabilize energy markets as best they could. The disruption exposed the vulnerability of a global energy system dependent on a narrow waterway at the mouth of the Persian Gulf that carries a fifth of the world’s globally traded oil and liquified natural gas.
Although the recent ceasefire agreement promises to reopen the Strait, Iran has showed it is capable of shutting shipping down, raising the prospect that it could do it again. So, can the world live without the Strait of Hormuz?
The closure of the Strait and aftershocks
Soon after U.S. and Israeli air attacks began on Iran in late February, Tehran started to actively disrupt traffic through the Strait of Hormuz. That brought about an exceptionally significant interruption to global energy flows, turning an international flashpoint into an immediate economic shock.
The closure of the strait sharply curbed the export capacity of Gulf petroleum producers, including Saudi Arabia, Iraq, Kuwait, Qatar, and the UAE, which all rely on Hormuz to varying degrees to reach international markets.
The impact was real: Prior to the disruption, roughly 20 million barrels of oil passed through the Strait daily; in March rates were less than half that. By mid-April, accumulated supply losses had reached 500 million barrels – equal to one month of U.S. oil consumption or more than a month of European demand.
While some oil continued to move through alternative pipelines and export routes, these systems fell far short of fully replacing the Strait’s capacity. “Shipping routes will always be the most economically efficient option,” said Afaq Hussain, a senior fellow with the Atlantic Council.
Alternative Routes: Necessary but Insufficient
Several alternative export routes across the region are available to producers, but they face significant hurdles, including attacks from Iran.
Geography and deep pockets provide the Gulf states with the best options to pursue alternatives to the Strait. Saudi Arabia’s East-West pipeline—also known as Petroline—runs from Saudi’s Abqaiq port on the Persian Gulf to the port of Yanbu on the Red Sea. The Saudi government says the line has an export capacity of 7 million barrels a day.
But in April Iran directly attacked that pipeline’s infrastructure, including a pumping station and several production facilities, slashing that Saudi’s production by 700,000 barrels a day.
The United Arab Emirates’ pipeline infrastructure has also sustained damage from Iranian attacks since joint US-Israeli attacks on Iran in late February. The Habshan-Fujairah pipeline, also known as the Abu Dhabi Crude Oil Pipeline (ADCOP), is one of the only direct oil and gas pipelines that transits petroleum from the Gulf directly to the Gulf of Oman, bypassing the Strait altogether to get shipments into the Indian Ocean. On the morning of March 14, smoke began rising from the Fujairah Oil Industry Zone on the UAE’s eastern coast as the first Iranian attack against UAE energy infrastructure unfolded, underscoring the vulnerabilities of the pipeline and alternative oil infrastructure than the Strait. Iran attacked the site again in May with more than 15 missiles and drones.
Alternatives to the strait now must consider a new security reality, suggested Anna Mikulska, senior vice president and head of analytics at CGCN Group, a Washington public affairs firm.
“This investment in infrastructure to diversify away from the Strait of Hormuz also needs to be coupled with anti-drone technology,” Mikulska said.
Broader plans
The crisis in the Strait has also energized discussions in Washington and Middle East capitals on investments in future projects for a world without Hormuz.
At a March symposium at the Atlantic Council, U.S. Special Envoy to Syria Tom Barrack brought up reviving the so-called Four Seas Initiative to link the Persian Gulf, Caspian, Mediterranean, and Black Sea through a Syria-Turkey pipeline and trade corridor. Dania Arayssi, program head and senior analyst at New Lines Institute for Strategy and Policy, told Alhurra that a key goal of such a project is to reduce Iran’s leverage.
“Slowly, we are trying to tell Iran that the Strait of Hormuz is not major leverage that can be used to jeopardize global prices or the economy in the region,” Arayssi said. “We have an alternative. This is something in the long term to undermine Iran and its capacity to use this card as leverage, whether against the United States or the Gulf countries.”
The Hormuz crisis has also given a new impetus to the India-Middle East-Europe Economic Corridor (IMEC), a project launched in 2023 to promote a sea-road-and-rail infrastructure connection from India through Saudi Arabia, the Red Sea, Jordan and Israel to European ports on the Mediterranean. IMEC could be useful in bypassing the Strait, the Atlantic Council’s Hussain told Alhurra but would need to plan for larger capacities to make a real difference. “Given the crisis, a single corridor like IMEC may not be able to address the demand of the kind of capacities we need, so you will need to broaden that corridor to a network,” he said.
The region’s pipelines can slow the bleeding from the closure of the Strait of Hormuz but cannot replace it. Analysts argue that the Saudi and Emirati lines, combined with the Iraqi pipeline to Turkey, could at best hope to account for only half of what typically passes through the strait.
The Case of Iraq
The Strait of Hormuz crisis has acutely affected Iraq, which relies on oil revenues for 90% of its state budget. Before the war, Iraq was exporting 90 million barrels a month via the Strait of Hormuz; in April, that was down to a mere 10 million. Without a transport mechanism, the oil-rich fields in southern Iraq have dramatically reduced their production, quieting the Iraqi region’s usually bustling industry.
Unlike the Gulf states, Iraq has limited recourse to its fundamental oil dependence problem. Its pipeline infrastructure, mainly the Ceyhan pipeline that connects the oil industry of northern Iraq to Turkish ports, is fraught with political tension, militia attacks, and limited capacity.
It is notable, then, that Kurdistan Regional Prime Minister Masrour Barzani announced in March that the KRG would allow oil to flow through the Kurdistan region pipeline “given the extraordinary circumstances facing the country.”
The KRG-Baghdad agreement over Ceyhan in March ended a long standoff but is a temporary fix to a historical problem grounded in both sides’ political objectives and underlined by mutual distrust. Analysts argue that Baghdad is using the oil dispute to fast-track infrastructure projects—such as another pipeline that would connect southern Iraq to the Syrian port of Baniyas and the Ceyhan line, bypassing KRG territory and reducing the region’s leverage on the oil issue.
Meanwhile, Iraq has only been using a fraction of the pipeline’s potential capacity due to Iraq-Turkey tensions. And since late February, Iran and pro-Iranian Iraqi militias attacked the Kurdistan Region and its oil infrastructure over 250 times. Like the Gulf, Iraq must adapt and find ways to protect its energy facilities and pipelines.
This predicament presents opportunities for Iraq to meaningfully diversify its oil exports from their dependence on the Strait of Hormuz. It also has allowed the post-Assad Syrian government to encourage oil exports through the country while improving Iraq-Syria relations. For example. Iraq authorized the reopening of the al-Waleed border crossing with Syria for the first time in a decade while resuming exports to Syria’s Baniyas port.
Asian Markets Suffer
Much of the discussion surrounding the Strait of Hormuz focuses on the oil-producing states that use the waterway to export. Yet the economic consequences of a disruption are felt just as strongly by the countries, particularly in Asia, that consume that energy. According to the U.S. Energy Information Administration, 84% of the crude oil and condensate moving through the Strait in 2024 was destined for Asian markets, with China, India, Japan, and South Korea accounting for 69% of all Hormuz crude flows. These countries bear a disproportionate share of the economic costs when the Strait closes.
China, the largest importer of Hormuz crude, benefited from stable supplies that fueled its manufacturing sector and export-oriented economy. India similarly relied on Gulf oil to meet the needs of its rapidly growing population and economy, while Japan and South Korea remained heavily dependent on imported energy due to limited domestic resources.
The outbreak of the conflict altered this equation. As shipping fell sharply and global oil markets shrunk, Asian consumers faced rising energy costs, higher transportation expenses, and increased economic uncertainty.
The International Energy Agency described the disruption as the largest supply shock in the history of the global oil market, with global oil supply falling by 10.1 million barrels a day in March. In China, refiners increasingly tuned to existing inventories as imports declined. Chinese crude imports fell significantly during the disruption, helping to moderate global oil prices but also illustrating the extent to which consumers were forced to adapt to constrained supplies. India faced pressure from rising import bills and inflationary risks, while Japan and South Korea confronted higher costs for both crude oil and liquefied natural gas (LNG).
The vulnerability extends beyond oil. In 2024, approximately 83% of the LNG transiting the Strait of Hormuz were headed for Asian markets. As a result, instability in the Strait also threatens electricity generation, industrial production, and broader economic growth. The crisis demonstrates that disruptions to global energy trade are not just an exporter problem. They are a consumer problem – and Asia sits at the center of that risk.
The Complicated Verdict
The crisis in the Strait has exposed a gap at the heart of the global energy system. For decades, governments and energy companies have invested in strategic reserves and alternative export routes designed to reduce dependence on the Strait. Many of those investments helped stave off an even greater shock during the disruption, which nevertheless demonstrated that there is still no true substitute for Hormuz.
The question, then, is not whether the world functions without the Strait. In some form, it can. Oil continues to move; alternative routes remain available, and markets adapt. However, the burden of replacing Hormuz falls unevenly across the global economy.
Iran’s ability to disrupt a narrow stretch of water thousands of miles from most consumers has emphasized a reality that decades of globalization can obscure: geography still matters. Even if the current ceasefire holds and energy flows gradually recover, the crisis has revealed vulnerabilities that cannot be negotiated away.
