The Strait of Hormuz Crisis: When a Chokepoint Chokes the World
There's a 21 mile wide strip of water between Iran and Oman that most people have never heard of. But right now, it's controlling everything from the price of gas in Ohio to the cost of shipping a container from Shanghai to Rotterdam. It's called the Strait of Hormuz, and it just became the world's most dangerous waterway.
Before the war started, about 138 ships passed through the Strait every single day. They carried oil, natural gas, and goods worth billions of dollars. Now? Only about five ships a day are making it through. The rest are either stuck waiting for safe passage or taking a much longer route around Africa, adding 3,500 miles and three weeks to the journey.
Why does this matter so much? Because 20% of all the oil used in the world passes through this tiny strip of water. Japan depends on it for 90% of oil imports. South Korea gets 70% through the Strait. European refineries in the Netherlands, Italy, and Spain rely on Gulf crude.
Iran knows this. That's why they've been mining the waters, attacking ships with drones, and threatening to close the Strait completely if the war continues. Sixteen commercial vessels have been hit so far. BP, Shell, and Maersk have all suspended transits. Even Chinese state shipping companies COSCO and China Merchants halted operations.
Insurance companies have already canceled coverage for any ship trying to pass through. Lloyd's of London, Swiss Re, and Munich Re all pulled coverage. Without insurance, shipping companies won't risk it. Hapag Lloyd, MSC, and CMA CGM all rerouted vessels around Africa despite the massive added cost.
The ripple effects are huge. Oil refineries in Japan, South Korea, and India that depend on crude from the Gulf are running low on supply. Germany's BASF chemical plants face feedstock shortages. French and Italian refineries are operating at reduced capacity.
A coalition of countries including the US, UK, France, and Saudi Arabia is trying to organize military escorts for commercial ships, but that's complicated. Who pays for it? How do you coordinate navies from different countries?
The Strait has been called the world's most important oil chokepoint for decades. Now we're all learning what happens when it actually gets choked.
