Where does oil transported through the Strait of Hormuz go, and which countries would be hardest hit if the strait were closed amid Middle East conflicts? With limited alternative routes but soaring energy demand, the consequences could be severe.
Cooperation between the United States and Israel in attacks on Iran has triggered a swift response from Iran, prompting analysts to warn of a sharp rise in global oil prices. Although Iran has not officially declared the strait closed, the Islamic Revolutionary Guard Corps broadcast a warning to vessels forbidding entry into the "Strait of Hormuz," one of the world's most critical shipping lanes for energy exports and imports. Approximately 30% of global seaborne crude oil passes through this strait.
Where do oil and natural gas go after passing through the Strait of Hormuz?
The U.S. Energy Information Administration (EIA) estimates that in 2024, about 84% of crude oil and condensate, along with more than 83% of LNG, will transit the Strait of Hormuz. Key destinations include China, India, Japan, and South Korea, which together account for 69% of crude oil imports through the strait last year. The manufacturing, transportation, and power generation sectors in these countries heavily depend on energy products from the Persian Gulf region.
Who is affected?
Closure of the Strait of Hormuz would damage the aforementioned Asian countries, major buyers of oil, with China being the largest importer—receiving up to 90% of the oil Iran exports to global markets. Disruptions in oil transport could increase fuel costs in China's manufacturing and export sectors.
It would also impact the exporting countries in the Arab Gulf region, whose economies largely depend on massive energy exports. For example, Saudi Arabia exports about 6 million barrels of crude oil per day through the Strait of Hormuz, the highest volume among regional countries.
Similarly, Iran exports approximately 1.7 million barrels per day, generating oil export revenues estimated at $67 billion for the fiscal year ending March 2025—the highest in a decade according to the Central Bank of Iran.
Disruption of energy shipments through the Strait of Hormuz would broadly affect the global economy by pushing fuel and production costs higher. If crude oil prices surge to $100 per barrel and stay elevated, it could increase global inflation by 0.6–0.7%, also driving up natural gas prices and potentially prompting central banks worldwide to slow monetary easing.
Closing the Strait of Hormuz would instantly remove about one-fifth of the world's traded oil, causing not just a price increase but a sharp surge fueled by panic.
However, official Iranian media reports that any final decision to close the strait must come from the Supreme National Security Council and be approved by the government.
Meanwhile, energy traders remain highly alert amid the situation. A senior crude oil analyst at Kpler noted a clear decline in vessel traffic through the Strait of Hormuz since the conflict began on Saturday, 28 February.
Geography of the Strait of Hormuz
The Strait of Hormuz lies between the Persian Gulf and the Gulf of Oman, opening into the Arabian Sea. Its northern shore borders southern Iran, while the southern shore borders the eastern coasts of the United Arab Emirates and Oman.
At its narrowest point, the strait is only 33 kilometers (21 miles) wide, with shipping lanes just 3 kilometers (2 miles) wide on each side. This narrowness makes it highly vulnerable to attacks. Despite its limited width, the strait can accommodate the world's largest crude oil tankers and serves as the main route for major Middle Eastern oil and gas exporters to ship energy products to global markets.
Currently, the number of vessels anchored and waiting on both sides—in the Gulf of Oman and the Persian Gulf—is rising sharply. Shipping data shows at least 150 oil and gas tankers are anchored outside the Strait of Hormuz, as owners worry about navigation safety following Iran's threats to close the strait.
On Sunday, 1 March, reports emerged of an attack on an oil tanker off the coast of Oman, signaling an escalation of conflict with energy assets becoming targets rather than just military infrastructure.
Can alternative routes compensate for a blockade?
Repeated threats to close the Strait of Hormuz over the years have led Gulf oil exporters to develop alternative export routes as options.
Saudi Arabia has activated the East–West pipeline, stretching over 1,200 kilometers, with a maximum capacity of 5 million barrels per day. In 2019, Saudi Arabia temporarily repurposed a natural gas pipeline to transport crude oil.
The United Arab Emirates has linked oil fields to the port of Fujairah on the Gulf of Oman via a pipeline capable of carrying 1.5 million barrels per day. Similarly, Iran commissioned the Goreh–Jask pipeline in July 2021 to transport crude oil directly to the Gulf of Oman, currently handling about 350,000 barrels per day.
However, the U.S. Energy Information Administration estimates these alternative routes collectively can handle only about 3.5 million barrels per day, roughly 15% of the crude oil volume currently transported through the Strait of Hormuz.
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