Iran's Hormuz chokehold threatens global trade but may soon lose its edge

Iran’s ability to restrict commercial navigation through the Strait of Hormuz has resulted in a dramatic collapse of traffic, with average daily ship movements falling to four and cargo tonnage dropping by roughly 96% compared with the same period a year earlier, according to IMF PortWatch. This choke point channels about one-quarter of the world’s seaborne oil, much of it destined for Asia, and also carries significant volumes of LNG, fertilizers, helium and other commodities essential to global manufacturing and food security.

The mere threat of missiles, mines or drone attacks raises insurance costs and freight rates, pressuring Gulf exporters, Asian importers and even U.S. energy prices. Iran can inflict such disruption, but prolonged interference would curtail its own petroleum exports, exacerbate domestic inflation and strain a military budget already limited by sanctions, as noted by SIPRI. Moreover, regional players are expanding pipelines and exploring alternative routes, while import-dependent countries are building strategic reserves and accelerating renewable energy projects, gradually diminishing the strategic value of Hormuz. Consequently, Iran faces a trade-off: limited, calibrated interference can extract short-term concessions, but extensive or prolonged blockage risks backfiring by prompting long-term diversification that weakens Tehran’s leverage.