Iran-Israel Conflict: Hormuz Strait Threatens Oil Supply & Global Economy

Strait of Hormuz Closure: Iran’s Leverage Over Global Oil and Gas

Iran’s recent escalation of conflict with the U.S. And Israel has extended beyond direct military strikes, creating a significant disruption to global energy markets through heightened tensions surrounding the Strait of Hormuz. The strategic waterway, vital for oil and gas exports, is now at the center of Iran’s response, signaling a willingness to impact global economic balances to counter perceived aggression. This situation presents a complex challenge for energy importers, particularly in Asia, and raises concerns about potential price volatility and supply disruptions.

The conflict began to escalate on February 28th, with Israel citing Iran’s support for armed groups, its nuclear program, and uranium enrichment as justification for preemptive strikes. This led to Iranian retaliation targeting Israel, regional U.S. Bases, and Gulf nations, and threats to disrupt shipping through the Strait of Hormuz. The Strait is a critical chokepoint, facilitating the passage of approximately 20 million barrels of oil per day, representing roughly 20% of global oil exports. In 2025, it also carried around 110 billion cubic meters of liquefied natural gas (LNG) flows.

A Critical Chokepoint

The importance of the Strait of Hormuz cannot be overstated. Saudi Arabia is the largest oil exporter utilizing this route, shipping around 5.5 million barrels per day – approximately 40% of the total volume. Iraq, the UAE, Kuwait, Iran, and Qatar follow, each contributing significantly to the flow of hydrocarbons. On the LNG side, Qatar dominates, handling an estimated 93% of all LNG exports transiting the Strait. While alternative routes exist, such as the Bab al-Mandab Strait, their capacity is limited to around 8 million barrels per year for oil and significantly less for LNG, reinforcing Hormuz’s central role in the Gulf’s hydrocarbon economies.

The current situation isn’t necessarily about a complete physical closure of the Strait, but rather the creation of a “near-closure” effect. Rising risks are already prompting disruptions, with QatarEnergy halting gas liquefaction due to increased security concerns and disrupted shipments. Iraq, a major OPEC producer, has also decided to curb production, citing limited storage capacity and escalating risks in the Gulf. This demonstrates that the disruption is not merely increasing freight and insurance costs, but is actively impacting production and export continuity. China’s strategic interests are particularly acute, as it is the world’s largest oil and gas importer, with roughly half of its crude oil sourced from the Middle East.

The Ripple Effect on Global Markets

The impact of disruptions in the Strait of Hormuz extends far beyond the immediate region. Since the escalation of conflict on February 28th, Brent crude oil prices have jumped above $80 per barrel, after a prolonged period between $60-$65. Higher oil prices translate directly into increased fuel costs, logistics expenses, and inflationary pressures, impacting economies globally. This is not simply an “Asia-only” problem; the interconnectedness of the global economy means that supply shocks in one region can have far-reaching consequences.

Even without a formal closure, increased insurance and freight costs can lead to canceled voyages, longer shipping routes, and delays. This creates a risk premium that is factored into prices, potentially leading to panic in the spot market and ultimately impacting contract prices and future expectations. The strategic power of the Strait of Hormuz lies not only in the ability to physically block passage, but also in the ability to craft passage expensive, risky, and unpredictable.

Türkiye’s Perspective

For Türkiye, the implications of a Hormuz disruption are twofold: supply security and economic impact. Türkiye has diversified its energy portfolio in recent years, relying on a combination of pipeline gas, LNG, and storage facilities, which provides some buffer against short-term disruptions. Its injection capacity and LNG terminals offer flexible import options. However, the greater vulnerability lies in the potential for higher prices. Increased oil prices will inevitably raise fuel and logistics costs, contributing to inflation. The key concern for Türkiye is not necessarily whether gas will arrive, but rather the impact of geopolitical risk on import costs and overall price stability.

Confirmed vs. Unclear

Here’s a breakdown of what is confirmed and what remains unclear as of March 6, 2026:

Confirmed:

• Iran has threatened to disrupt shipping in the Strait of Hormuz in response to U.S.-Israeli actions.
• QatarEnergy has halted gas liquefaction due to security risks.
• Iraq has decided to curb oil production due to limited storage capacity.
• Brent crude oil prices have risen above $80 per barrel.
• The U.S. Sank an Iranian warship in international waters off the coast of Sri Lanka.
• NATO air defense systems intercepted an Iranian missile traveling towards Turkey.

Unclear:

• The extent to which the Strait of Hormuz will be physically closed.
• The long-term impact of production cuts by Qatar and Iraq.
• The full extent of casualties in Lebanon, with reports indicating at least 50 killed and over 300 injured.
• The precise details of the strikes carried out by Israel in Tehran.
• The full impact of the conflict on global economic growth.

What Happens Next?

The immediate future hinges on de-escalation efforts. However, with Ayatollah Ali Khamenei among those killed in the initial strikes, the prospect of a swift resolution appears unlikely. Further escalation could involve expanded attacks on regional infrastructure and increased disruption to shipping in the Strait of Hormuz. The U.S. Military buildup in the region suggests a commitment to maintaining security, but also raises the risk of direct confrontation.

The situation is further complicated by the involvement of other actors, such as Hezbollah in Lebanon, which is facing intensified Israeli strikes. The U.S. Embassy in Jordan has issued a shelter-in-place order, indicating a broader regional instability. The coming days and weeks will be critical in determining whether the conflict can be contained or will spiral into a wider regional war.

ABC News provides ongoing live updates on the situation, while CNN offers a detailed overview of the conflict’s origins and current state. AP News is also providing live updates, including footage of an Iranian drone carrier on fire after strikes.