What will happen to the UAE and global energy markets if Iran has closed Hormuz’s drainage? , world News
Stress in the Middle East has once again spotlight the straight of an important Chokpoint Hormuz in global energy supply. Between the growing friction between Iran and Israel, the fear is growing on the possibility that Iran can try to close the straight, which can disrupt the flow of oil and gas that gives strength to the world.
Straw of Hormuz : why it matters
Hermuz’s Strait is a narrow, 33-kilometer wide waterway that separates Iran and Oman. It is the world’s most strategic oil transit chokpoint. In 2024, about 21 million barrels of crude oil and sophisticated products pass through the straight every day, accounting for 20 percent of global oil consumption. Additionally, the straight provides:
- 25% of all sea oil trade
- Global liquefied natural gas (LNG) 20%of exports, mainly from Qatar and UAE
For UAE, Strait is unavoidable. About 75 percent of oil exports go to Asia, especially China, India, Japan and South Korea.
Effect in areas
If Iran was decisively proceeding towards closing the draft of Hermuz, the wave effect would be felt throughout the Gulf region, threatening energy exports, trade flows and shipping lanes. However, among regional exporters, the UAE stands out to take active measures to reduce such weaknesses. Abu Dhabi crude oil pipeline, which connects inland production facilities to the Fujirah terminal, strategically located outside the straight, has a capacity of 1.8 million barrels (b/d) per day. It provides an important alternative export route for the UAE, which during 2024 had an average of 3.3 million b/d in oil exports. While the pipeline does not replace the hormuz perfectly, it allows the UAE to maintain a large part of its export flow, even in a disintegration landscape. In short term, a sudden increase in oil prices, possibly starting with nervousness or market speculation, can actually promote national revenue. However, if the disruption proves for a long time, the UAE will face logistic bottlenecks, increase in shipping insurance premium, and increasing freight costs, especially in maintaining their strong energy trade with Asian markets.Other Gulf countries will also be affected:
- Saudi Arabia sends 6 million B/D via Strait, but can resume up to 5 million B/D through its pre-west pipeline.
- A major LNG exporter Qatar, may see the major shipping delay.
- Kuwait and Iraq, with low reconsideration options, will be more vulnerable to temporary export disruptions.
United States
The US imported less than 5% of its oil, which limits the direct supply risks through the straight of the hormuz. However, value instability will still give a tough competition to consumers. According to Goldman Sachs, oil prices can send $ 100- $ 120 per barrel, or even $ 150 in the worst condition. In such cases, American gas prices can exceed $ 4 per gallon, promote inflation and increase domestic budget.
Europe
Europe is about 15% of its gas sources from Qatar, which makes Strait important for its energy supply. A blockade will spoil the lack of energy of Europe, which is already under pressure from the supply of low Russian gas. will result:
- Increase in prices for homes and factories
- Rising inflation
- Slow economic growth
Asia
Asia has the most to lose:
- 75% oil passing through Strait is bound to Asia
- China receives 45% of its crude through Strait and may need to attract emergency reserves
- India is also deeply dependent on bay oil, will face fuel shortage and economic disruption
- Japan and South Korea will experience supply shocks and high import costs
Re -starting tankers around the Cape of Good Hope in Africa will greatly increase shipping time and cost, affecting everything from fuel prices to supply of chains.
Africa
East African nations such as Kenya and Tanzania, which import fuel through the Strait, will see immediate effect. Already in 2024, the cost of the tanker in the region has increased by 25–35% due to tension in both the Red Sea and Strait of Hormuz. A complete closure will reduce and increase the living expenses.
Can Iran really do so?
Technically, Iran has near military capabilities required to disrupt or potentially block the straw of hormuz. These include naval mines, ship-ship missiles, and GPS jamming technology, tools, or threatened to control sea routes in the past. During the 1980s Iran -Iraq struggle, often referred to as a “tanker war”, Iran managed to disrupt shipping in the region, although it never managed to close the straight completely completely. According to the media outlet Press TV operated by Iran’s state, the Iranian Parliament has approved a plan to shut down the Straight of Hormuz. However, the right to implement such a decision is with the Supreme National Security Council. Despite rhetoric and preparation, most experts do not consider a possibility of a complete blockade. An important reason is that Iran itself depends on the straight to export about 2.5 million barrels per day, which includes about 1.5 million barrels per day in China. Closing the route will cause great damage to Iran’s own economy and the risk of triggering a US-LED Military reaction.
The Big Picture: Global Economic Fallout
A long discontinuation of the Straight of Hormuz can establish a comparable global energy crisis on the 1973 oil embarrass scale, which is accompanied by the impact spread beyond the energy sector. Experts have warned that oil prices can rise to $ 150 per barrel, an increase that sends shockwaves through financial markets, triggers a sharp spike in global inflation, and puts heavy pressure on both developed and emerging economies. The wave effects will not stop at the fuel pump, supply chains in industries will become stressful, all those who absorb all high input costs and delayed logistics burden with transport, manufacturing and retail areas. These high costs will inevitably pass consumers worldwide.While strategic petroleum reserves (SPRS) are deployed as a buffer against such shaking, they are not a comprehensive security guard. Current global reserves include:
- 600 million barrels organized by the United States
- 400 million barrels in European countries
- 1.2 billion barrels stored in Asia
However, these reserves provide only short -term relief. Their effectiveness is limited to the rate on which the oil can be drawn down, and due to lack of access, which vary in areas. In front of a constant disruption, SPRS will buy time – but will not solve the crisis. Energy-hungry economies, especially in Asia and Europe, will be the weakest, and even large-scale reservations can run against the time itself because market tightening and geopolitical risk increases.
Current Status: 23 June, 2025
So far, the strainer of the hormuz is open, but the stress is constantly increasing and the markets are reacting with caution. In recent weeks, Brent crude prices have climbed from $ 75 to $ 82 per barrel, showing the increasing concern over the safety of one of the world’s most important energy corridors. The increase in oil prices underlines market sensitivity to geo -political risks in the region.In direct response to Iran’s dangers, the United States has taken concrete steps to strengthen its military appearance. The USS Nimitz Career Strike Group is redirected from the South China Sea to the Middle East, aimed at strengthening the regional preventive. It has joined the USS Carl Vinson, already posted in the Arabian Sea. Together, these two carrier groups create an important part of Washington’s broad efforts, which is an important part of widespread efforts to increase maritime security and protect the uninterrupted flow of commerce through Strait.The spirit of urgency also resonates in the corporate world. Shell’s CEO Well Sawan warned that “any growth can significantly disrupt global trade,” energy is capturing depth in markets and highlights how the geopolitical stress and global economic stability connected to each other.The analysis is based on information and reporting from several official sources, including regional insight through US Energy Information Administration (EIA), OPEC, Reuters, Bloomberg, Plats, Loyids List, CNBC, as well as Khaleej Times.
