Energy markets have long treated the closure of the Strait of Hormuz as the catastrophe that strategists discuss in conference halls but quietly assume will never occur. Since the Iranian revolution in 1979, every regional crisis has revived predictions that the narrow waterway linking the Persian Gulf to the Indian Ocean might one day become impassable.
But even during the tanker war of the 1980s, the American invasion of Iraq in 2003, the attacks on Saudi oil infrastructure in 2019 and the years of shadow conflict between Iran and Israel, oil continued to flow. Markets became accustomed to the idea that Hormuz was too important to close. The U.S.-Israel war on Iran, which erupted earlier this year, has shattered that assumption.
Traffic through the strait remains severely disrupted. Ceasefires remain fragile, shipping advisories are rewritten almost daily, and insurers continue to price Gulf voyages as though they were wartime operations. The result: commercial confidence has collapsed faster than physical infrastructure. Tankers are reluctant to enter the Gulf, even when ports are technically open.
The distinction between a blocked route and an unusable one matters little when shipowners fear drones, mines or missile strikes. Hormuz may not be fully closed in the formal sense, but it is operating at a fraction of its normal capacity, which for the global economy amounts to much the same thing.
The consequences are immense because no maritime chokepoint matters more than this one. In ordinary times, roughly 20 million barrels of crude oil and petroleum products pass through Hormuz every day, accounting for around a fifth of global consumption. Nearly the same share of the world’s liquefied natural gas exports also transits the strait, much of it from Qatar.
Less noticed, though scarcely less important, are the vast quantities of helium and fertiliser feedstocks that move through the same narrow corridor. Modern economies rely on the uninterrupted movement not merely of fuel but also of the industrial gases needed for semiconductor manufacturing, magnetic resonance imaging, and advanced scientific equipment, as well as urea that underpins agricultural production from Brazil to India.
For decades, Gulf monarchies understood the vulnerability implicit in this geography and sought alternatives. Engineers, planners and consultants produced maps criss-crossed with proposed pipelines running west to the Red Sea or east to the Gulf of Oman. Those plans are now undergoing the first true stress test in their history. Some of the bypass infrastructure has performed impressively. Collectively, existing alternatives can reroute between 3.5m and 5.5m barrels a day of crude exports away from Hormuz. That is a significant achievement. Nonetheless, it is insufficient.
The backbone of this emergency system is Saudi Arabia’s East-West Pipeline, better known as Petroline. Constructed during the Iran-Iraq war, when attacks on tankers first exposed the strategic fragility of Gulf exports, the pipeline stretches from the oil-processing hub at Abqaiq to Yanbu on the Red Sea coast. Riyadh expanded its theoretical emergency capacity to around 7 million barrels a day in 2019 after attacks on Saudi infrastructure briefly disrupted production.
In practice, however, the line cannot sustain such volumes indefinitely. Yanbu’s export terminals were not designed for prolonged wartime surges, and congestion has become acute. Tanker queues now stretch for days. Analysts monitoring satellite data and shipping movements believe actual flows remain well below nominal capacity.
Even when oil reaches the Red Sea, another bottleneck awaits. Crude heading onwards to Europe must traverse Egypt’s Sumed pipeline, which links Ain Sokhna on the Red Sea to the Mediterranean terminal at Sidi Kerir. Sumed’s capacity of roughly 2.5m barrels a day is substantial in ordinary circumstances but inadequate for a crisis of this scale.
Flows have surged since the outbreak of war, reportedly rising by more than 150 per cent, but the line remains a hard physical constraint. Europe can receive only so much redirected Gulf oil before the system reaches saturation.
Iran has recognised the strategic significance of these alternatives and adjusted its targeting accordingly. In April, a drone strike on a Petroline pumping station temporarily knocked out around 700,000 barrels a day of capacity.
Saudi Aramco restored operations within three days, demonstrating the resilience of modern energy infrastructure and the kingdom’s formidable repair capabilities. However, the episode underscored a troubling reality: Pipelines may bypass maritime chokepoints, but they merely replace one vulnerable target with another. Fixed infrastructure scattered across an open desert is difficult to defend completely against cheap drones and precision strikes.
The United Arab Emirates has attempted a different solution. Its Abu Dhabi Crude Oil Pipeline, known as Adcop, runs from the inland fields at Habshan to the export terminal at Fujairah on the Gulf of Oman. Unlike Saudi Arabia’s system, Adcop allows tankers to load directly outside Hormuz. With a capacity approaching 2 million barrels a day, it is strategically invaluable.
Fujairah has become one of the world’s most important bunkering and storage hubs precisely because it sits beyond the Gulf’s narrow exit. But geography alone has not guaranteed safety. Iranian strikes on Fujairah in March ignited storage tanks and interrupted loadings several times. The UAE succeeded in restoring operations relatively quickly, but the attacks demonstrated that bypasses do not eliminate strategic vulnerability; they merely relocate it.
For Iraq, the situation is grimmer still. Before the war, the country exported roughly 3.4 million barrels a day, almost all of it through the southern terminals near Basra. Baghdad possesses only one meaningful alternative route: the pipeline connecting Kirkuk in northern Iraq to the Turkish port of Ceyhan.
That line reopened only recently after years of disputes and sabotage. Even now, flows amount to merely a fraction of Iraq’s former southern exports. The gap between what Iraq once shipped and what it can export today is measured not in percentages but in millions of barrels.
Kuwait’s predicament is starker. Every barrel of Kuwaiti crude once exited through Hormuz. Unlike Saudi Arabia or the UAE, the country lacks a major bypass pipeline altogether. Kuwait Petroleum Corporation’s declaration of force majeure in March, therefore, carried broader significance than the legal language implied.
It was an admission that one of the world’s richest oil exporters had effectively lost access to international markets. Even if maritime traffic resumes, restarting production will not be immediate. Oilfields shut under wartime conditions often suffer technical degradation, and restoring output can take months.
Qatar illustrates a different dimension of the crisis. The emirates’ oil exports are modest compared with those of its neighbours, but it is indispensable to global gas markets. Ras Laffan, the enormous industrial complex on Qatar’s northeast coast, anchors nearly a fifth of the world’s liquefied natural gas trade.
Unlike oil, LNG lacks flexible transportation networks and strategic stockpiles. Pipelines cannot simply be improvised across deserts and oceans. If Hormuz remains compromised, there is no serious alternative route for Qatari gas exports. Europe, which turned heavily towards LNG after Russia invaded Ukraine, is once again confronting the dangers of overdependence upon vulnerable energy corridors.
Iran has not escaped the trap of geography either. In recent years, Tehran invested heavily in a pipeline linking Goreh to the export terminal at Jask on the Gulf of Oman, theoretically enabling up to 1m barrels a day of exports outside Hormuz.
However, sanctions, underinvestment and incomplete infrastructure have rendered the project largely symbolic. Actual throughput has remained tiny. During the present war, loadings at Jask have been negligible. Iran, despite years of rhetoric about bypassing Hormuz, remains tied to the same geography as its rivals.
Among policymakers, there will inevitably be renewed calls for more pipelines, more terminals, and greater diversification away from the Gulf. Such ambitions are understandable. But they underestimate both the cost and the strategic logic of modern warfare.
Replicating Hormuz’s carrying capacity through pipelines alone would require hundreds of billions of dollars and perhaps a decade of construction. Even then, the infrastructure would remain vulnerable to drones, cyber attacks and sabotage. The age in which pipelines guaranteed security has ended. Precision technology has made fixed energy infrastructure easier, not harder, to disrupt.
The crisis has also become a severe political challenge for America’s president. Even modest price increases can erode public confidence rapidly. A prolonged disruption in Hormuz risks feeding inflation precisely when central banks had hoped the post-pandemic surge in prices was finally under control.
Strategic petroleum reserves can cushion shocks for a time, but they cannot substitute for millions of barrels a day indefinitely. The administration’s calculations are therefore no longer merely geopolitical. They are electoral.
India, meanwhile, is one of the countries most exposed to the turmoil. The country imports the majority of its crude oil from the Gulf. Indian refiners spent years adapting to discounted Russian supplies after the invasion of Ukraine, but Gulf producers remain central to the country’s energy balance.
Higher oil prices threaten India’s trade deficit, place pressure on the rupee and complicate the Reserve Bank of India’s inflation management. Fertiliser disruptions are equally worrying. India remains heavily dependent on imported urea and petrochemical feedstocks that transit through the Strait of Hormuz. Rising fertiliser costs eventually feed into food prices, making an energy crisis politically sensitive far beyond the petrol pump.
There is also a broader strategic lesson for India. For years, policymakers in New Delhi viewed energy security primarily through the lens of supplier diversification. The Hormuz crisis demonstrates that routes matter as much as suppliers. Even if India buys crude from multiple countries, much of that energy still passes through the same narrow maritime corridor.
This may accelerate Indian investment in strategic reserves, renewable energy and naval capabilities in the Indian Ocean. The crisis strengthens the logic behind India’s efforts to position itself not merely as a continental power, but as a guardian of regional sea lanes.
The world economy has spent decades building on the assumption of frictionless trade and dependable energy flows. Hormuz exposed the fragility of those assumptions. The pipelines crossing Saudi deserts and Emirati mountains have provided some relief, but they have not solved the underlying problem. Geography still governs global energy markets, and geography cannot be engineered away easily.
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