THE CLOSURE OF THE STRAIT OF HORMUZ: A CRISIS SCENARIO FOR THE GLOBAL ECONOMY

Located between Iran and Oman and only 33 kilometers wide at its narrowest point, the Strait of Hormuz is a critical logistics chokepoint for the global economy. This narrow waterway, through which approximately one-quarter of the world’s oil supply is transported, currently faces a serious threat of blockage due to rising tensions between Iran, the U.S., and Israel. The temporary ceasefire agreements reached under the current circumstances have not yet removed the strategic obstacles in the Strait, and a lasting foundation for peace is not yet in sight. This process, which began as a regional tension, carries the potential to rapidly escalate into a global economic crisis.

HISTORIC SHOCK AND PRICE VOLATILITY IN ENERGY MARKETS

The partial or complete disruption of the Strait of Hormuz has triggered one of the largest supply shocks in modern history in energy markets. According to March 2026 data, global oil production decreased by 10.1 million barrels per day within a single month. Described by the World Bank as “the largest energy supply shock in history,” this situation has directly impacted prices. The price of Brent crude oil, which stood at $72 at the beginning of 2026, rose to $118 by the end of March—an increase of approximately 64%. The fact that prices have remained within the $100–$120 range despite a partial easing following the ceasefire demonstrates just how critical the Strait is to global energy security.

THE BACKBONE OF TRADE: RISKS BEYOND OIL

The volume of trade passing through the Strait of Hormuz is not limited to crude oil alone. A closer look at the composition of the commodity flow through the Strait reveals the depth of the crisis. Thirty-eight percent of global seaborne crude oil trade, 29 percent of LPG, 19 percent of liquefied natural gas (LNG), and 19 percent of refined products pass through this corridor. Additionally, chemical substances and fertilizer raw materials are also shipped via this route. In this context, the Strait of Hormuz is not merely an “oil tap,” but a central component of the global supply chain.

DOMINO EFFECT: COSTS SPILLING OVER FROM ENERGY TO FOOD

The sharp rise in energy prices has created a chain reaction of inflationary pressure through production and logistics costs. The 94% increase in Asian LNG prices and the 59% rise in European natural gas prices over the course of a month are exerting a constraining effect on industrial production. Another less-noticed yet critical aspect of the crisis is fertilizer supply. The Gulf Region accounts for approximately one-fifth of global urea production. The closure of the Strait has blocked the flow of this critical input for agricultural productivity to the markets. World Bank projections indicate that the fertilizer price index will rise by 31% and urea prices by 60% by 2026. According to data from the United Nations Food and Agriculture Organization (FAO), rising energy and fertilizer costs have driven food prices to their highest level in the past three months as of April.

MACROECONOMIC IMPACTS AND MARITIME SHIPPING

From a logistical and financial perspective, the war risk has caused insurance premiums to quadruple, dramatically increasing shipping costs. This situation is leading to a slowdown in trade due to the “risk premium,” even without an actual shutdown. In particular, premiums demanded for crude oil and derivatives in Asian markets have reached their highest levels in recent years. As a result of rising costs and declining economic activity, a contraction in global trade volumes and downward revisions to growth rates have become inevitable.

THE VULNERABILITY OF EMERGING ECONOMIES

Developing economies, which have low resilience to external shocks, are bearing the brunt of this crisis. Countries in Africa and South Asia, in particular, are facing a structural crisis caught in the triangle of energy costs, fertilizer shortages, and food inflation. Global trade growth expectations for 2026 have been revised downward from 2% to 1.5% due to these geopolitical risks. The supply chain vulnerabilities experienced following the COVID-19 pandemic and the Russia- Ukraine War confirm that regional issues can escalate into a global “structural catastrophe,” as seen in the case of the Strait of Hormuz.

A potential outcome of the Iran-U.S. & Israel conflicts is the possibility of a structural change in the Strait of Hormuz transit system. During ceasefire negotiations, it has been observed that the Iranian side is insisting on a new protocol regarding the passage of ships through the strait. In the strait, where free passage was previously allowed, Iran is now demanding a mechanism it controls and from which it collects fees. If this demand is accepted as part of a peace agreement, it will impose a permanent burden on transportation costs. While these costs may appear acceptable to logistics firms in the short term, in the long run, Iran will have gained a significant geo-economic advantage.