There is a 33-kilometre strip of water between Oman and Iran. Every day, roughly 17-18 million barrels of oil pass through it — about 20% of global supply, including 30% of all traded LNG. It is called the Strait of Hormuz, and right now it is the single most important piece of geography on earth.
Iran has threatened to close it. The US has deployed two carrier strike groups to prevent that. Here is a clear-eyed look at what a closure would actually mean — and how likely it is.
Why Iran Would Close Hormuz
Iran has threatened to close Hormuz three times before — in 2012, 2018, and 2019 — but never followed through. The calculus was always the same: closing Hormuz would hurt Iran as much as everyone else, since Iran's own oil exports pass through it.
That calculus has changed. Iran's oil exports are already heavily sanctioned. A closure would hurt its enemies more than itself, at this point. More importantly, after sustained US and Israeli airstrikes on Iranian nuclear facilities, the political pressure inside Iran to retaliate in a maximalist way is intense.
The Three Scenarios
Scenario A: Harassment without closure (Most likely — 60%)
Iran seizes or attacks individual vessels, forces insurance premiums to spike, and slows traffic without formally closing the strait. Oil rises to $130-140. Shipping costs double. Global inflation increases 1-1.5 percentage points over three months. Painful but manageable.
Scenario B: Partial closure (Moderately likely — 30%)
Iran mines the approach channels or sinks a vessel, forcing temporary rerouting. Closure lasts 2-4 weeks. Oil spikes to $150-170. The IEA coordinates strategic reserve releases. Global inflation increases 2-3 percentage points. Markets fall 15-20%. A sharp but potentially brief shock.
Scenario C: Extended closure (Low but not negligible — 10%)
Full military confrontation in the strait. Closure lasts months. Oil above $180. Global recession probability above 70%. Inflation in double digits in oil-importing nations. The 1973 scenario, but faster and broader.
What Happens to Different Countries
Japan and South Korea import virtually all their oil and a huge proportion of it from Gulf states through Hormuz. Japan has already released strategic reserves. Both would face severe economic stress under any closure scenario.
Europe has been diversifying energy since Ukraine. LNG from the US and Qatar provides some buffer. But European industrial production is highly sensitive to energy prices and would contract under Scenario B or C.
United States is a net oil exporter but is deeply integrated into global oil pricing. Domestic petrol prices would spike regardless of whether US oil is physically affected.
India has been buying discounted Russian oil and has some buffer. But India imports 85% of its energy needs and would be severely affected by any extended closure.
The One Indicator to Watch
Watch the WTM Energy Score. If it rises above 95, that means our model is detecting a measurable shift in global energy stress signals — commodity prices, shipping data, and news sentiment all moving together. That is the early warning sign before official announcements.