Why the Strait of Hormuz Matters to the Global Economy

The Strait of Hormuz is one of the most strategically important waterways in the world — and renewed tensions between the United States, Israel and Iran are putting it back in the spotlight.

Located between Iran on one side and Oman and the United Arab Emirates on the other, the strait connects the Gulf to the Arabian Sea. At its narrowest point, it is just 33 kilometers wide, with shipping lanes only about 3 kilometers across in each direction. Despite its size, it carries an enormous share of global energy trade.

According to the U.S. Energy Information Administration, roughly 20 million barrels of oil passed through the strait each day in 2024 — representing about 20–30 percent of global oil and gas flows.

Around one fifth of global liquefied natural gas shipments also transit the corridor, much of it destined for Asian markets including China, India, Japan and South Korea.

Iran has hinted at shutting the strait amid escalating conflict. Even without a formal closure, tanker traffic has slowed and security risks have increased.

Analysts warn that any sustained disruption could push oil prices higher, fuel inflation, tighten financial conditions and slow global economic growth.