The Strait of Hormuz, Explained: Why One Waterway Moves the World

Geography handed the world a vulnerability and named it the Strait of Hormuz. The channel between Oman and Iran is, at its narrowest, only a few dozen kilometres wide, and through it passes roughly a fifth of the oil the world consumes, along with a large share of its liquefied natural gas.

No easy way around

The reason the strait matters so much is that there are very few alternatives. A handful of pipelines can bypass it, but their combined capacity falls far short of what the waterway normally carries. When traffic through Hormuz is disrupted, most of that oil cannot simply take another route — it stays in the ground or the tank.

That is why even the threat of closure carries a price, and why actual disruption — as reported in recent days — sends an immediate shock through global markets that no amount of strategic reserve can fully absorb.

The shared interest in stability

The strait's importance is also, paradoxically, a source of restraint. Because so many economies depend on it, a long closure hurts producers and consumers alike, which historically has created pressure from all sides to keep it open. Whether that logic holds in the current escalation is the question markets are nervously trying to price.