If the Strait of Hormuz remains threatened and constrained by the war on Iran, Asia will face its most serious test of energy security since the 1973 oil embargo. For decades, policymakers understood the vulnerability, but few likely believed it would ever be realized on such a disruptive scale.
The stakes of the current crisis escalated dramatically on February 28, 2026, when a joint United States–Israel military operation killed Iran’s Supreme Leader, Ayatollah Ali Khamenei. The targeted strikes created a historic rupture in the Islamic Republic’s command structure and triggered an uncompromising retaliatory posture from Tehran.
The resulting confrontation has now spilled directly into the Strait of Hormuz, transforming a long-recognized strategic chokepoint into an active theater of war and geopolitical leverage.
Iran’s warning that it will “set fire” to vessels attempting to pass through the strait has shifted the crisis from abstract risk to operational threat. Whether Tehran can fully enforce such a declaration remains uncertain. What is beyond dispute, however, is the structural exposure it reveals, particularly for Asia.
Roughly 20% of global oil and a comparable share of seaborne liquefied natural gas (LNG) move through the narrow corridor between Iran and Oman. In 2025, around 20 million barrels per day, nearly $600 billion in annual energy trade, transited the waterway. About 3,000 vessels pass through it each month.
Narrow waterway, concentrated risk
At its narrowest point, Hormuz is about 33 kilometers wide. The primary shipping lanes lie within the territorial waters of Iran and Oman. The channel is deep enough for fully laden very large crude carriers, making it indispensable for Gulf exporters.
That geography grants Tehran asymmetric influence. Even in the absence of a formal blockade, drone strikes, missile threats and naval harassment can make transit commercially prohibitive. Insurance markets have responded quickly through escalated premiums, raising the cost of shipping and raising inflationary risks worldwide.
Reports indicate traffic has already thinned, with dozens of tankers idling near the strait. Charter rates for supertankers on Gulf-to-Asia routes have surged. The corridor need not be physically sealed to be economically impaired. In modern energy markets, the insurance market can close a strait faster than a navy.
The bulk of Hormuz-bound crude is destined for Asia. In recent years, roughly four-fifths of oil and condensates exiting the strait have flowed eastward. China, India, Japan and South Korea account for most of those imports.
China purchases most of Iran’s 1.6-1.7 million barrels per day of exports and relies heavily on additional Gulf suppliers whose shipments also pass through Hormuz. Japan and South Korea import more than 80% of their energy needs. Taiwan and Singapore face similar structural exposure.
China is not without buffers, but its insulation is partial. Beijing has expanded its strategic petroleum reserves over the past decade precisely to cushion external shocks, and it has increased discounted crude imports from Russia since 2022 as a partial hedge against maritime disruption. Yet neither mechanism fully offsets Gulf dependence.
Russian supply cannot replace Hormuz volumes at scale, and reserve drawdowns provide only temporary relief. The crisis also casts uncertainty over Beijing’s broader ambitions: Belt and Road-enabled energy corridors across West Asia were designed to deepen supply integration, not operate amid a military confrontation.
Moreover, efforts to expand renminbi-denominated oil trade depend on predictable shipping flows. A prolonged disruption underscores a reality Beijing has long sought to mitigate: that China’s energy security remains tied to contested sea lanes beyond its direct control.
Oil markets, though volatile, possess certain buffers. Cargoes can eventually be rerouted and production elsewhere can increase incrementally. Gas markets, however, are tighter and less flexible.
Approximately one-fifth of global LNG trade passes through Hormuz. Qatar, a cornerstone supplier for both Asia and Europe, depends on these routes. LNG infrastructure is rigid: liquefaction capacity is fixed, contracts are destination-bound and spare volumes are limited. Storage cushions are thin.
If Qatari cargoes are delayed or constrained, Asian buyers would compete directly with Europe for replacement supply. Price spikes would not be linear. Electricity costs, industrial production and fertilizer inputs would rise rapidly.
An oil spike strains mostly transport costs; a gas spike permeates the entire global economy.
The specter of sustained energy price spikes is already reviving inflationary fears. A US $10 rise in crude typically adds several tenths of a percentage point to headline inflation.
Elevated LNG prices feed into power generation and food production, broadening the impact. Central banks across Asia, having only recently regained partial inflation control, would face renewed trade-offs between price stability and growth support.
Emerging Asian economies are especially vulnerable, with many operating fuel subsidy regimes. Higher import costs will strain fiscal balances across the region. If geopolitical risk strengthens the US dollar, imported inflation intensifies.
The 1970s demonstrated how energy disruptions can reshape economic trajectories. The question now is whether Asia’s more diversified and technologically advanced economies can avoid a similar dynamic or whether energy dependence remains the decisive constraint.
Can Iran sustain a closure?
Iran possesses tools to disrupt transit in naval mines, fast attack craft, anti-ship missiles, drones and submarines. The Islamic Revolutionary Guard Corps Navy has long trained for chokepoint harassment.
Yet a sustained total shutdown would be difficult and costly. During the 1980s “Tanker War,” attacks on shipping prompted US naval escorts and large-scale maritime security operations and traffic eventually resumed.
Moreover, Iran itself exported roughly $67 billion in oil last year, meaning a prolonged closure would also constrict its own revenues. This makes episodic disruption more plausible than a permanent blockade, but episodic disruption may be sufficient to destabilize markets.
Saudi Arabia and the United Arab Emirates have developed bypass pipelines to the Red Sea and the Gulf of Oman. These routes provide partial relief but cannot fully compensate for Hormuz flows. Analysts estimate that even with maximum diversion, millions of barrels per day would remain vulnerable.
The US, cushioned by domestic shale production and LNG exports, retains strategic flexibility. Asia, however, does not. The region’s economic rise has been powered by imported hydrocarbons. In an era of intensifying US-China rivalry and fracturing geopolitical alignments, that dependence carries new strategic weight.
If the current crisis persists, it will not simply be another cyclical commodity spike. It will expose the structural underpinnings of Asia’s post-Cold War growth model and the geopolitical risks embedded within it. And Asia’s strategic autonomy may prove narrower than its economic influence suggests.
Saima Afzal is an independent and freelance researcher specializing in South Asian security, counter-terrorism, the Middle East, Afghanistan, and the Indo-Pacific region. She holds an M. Phil in Peace and Conflict Studies from the National Defence University, Islamabad, Pakistan.
