Rather than de-escalating, the confrontation between Israel and Iran has intensified, with missile salvos exchanged on both sides and the looming threat of US intervention. In this context, on the morning of 19 June 2025, Behnam Saeedi, a member of the Iranian Parliament’s National Security Committee, stated that "Iran has a variety of strategies to counter its enemies and chooses these strategies based on prevailing circumstances" and described the closure of the Strait of Hormuz as one of Iran’s "possible responses" to foreign aggression.
The question remains whether it can actually do so. Iran does not possess a navy with large warships, which in any case would be unable to counter the US naval presence already strongly established in the area. However, the Islamic Revolutionary Guard Corps (IRGC) operates an extensive fleet of small fast-attack boats, missile catamaran corvettes, and midget submarines. Over the past three years, Iran has commissioned hundreds of new vessels, including four missile catamaran corvettes designed for high-seas operations. Iranian tactics for a potential closure would likely involve naval mines, historically one of the most immediate means of halting or slowing maritime traffic through the strait. Iran could also deploy land-based cruise and ballistic missiles, as well as kamikaze drones. Electronic warfare should not be overlooked either, including satellite signal jamming, which could lead to serious accidents.
The consequences of a closure—or even a mere reduction or delay in maritime traffic—would be severe, particularly for Europe. The Strait of Hormuz is considered the "world's most significant oil transit chokepoint" according to the US Energy Information Administration. Every day, around 20 to 21 million barrels of oil pass through it, equivalent to 20 percent of global consumption. Reliance on this passage varies among oil-producing countries, with Kuwait sending all its exports through the strait, followed by Iraq at 95 percent and the United Arab Emirates at 85 percent.
Unlike the Red Sea, which offers the alternative of circumnavigating Africa, the Persian Gulf route through the Strait of Hormuz has no maritime alternatives. While there are land-based pipeline options in the event of a closure, their capacity is limited compared to maritime volumes. Saudi Arabia operates the Petroline (also known as the East-West Pipeline), which runs across the country from the Abqaiq facility to the Red Sea and has a nominal capacity of around 4.8 million barrels per day. It is currently underutilised, with a spare capacity of approximately 2.8 million barrels per day. The United Arab Emirates runs the Abu Dhabi Crude Oil Pipeline, capable of transporting 1.5 million barrels per day, linking Abu Dhabi’s onshore oil fields to the port of Fujairah on the Gulf of Oman, allowing crude oil shipments to bypass the Strait of Hormuz. The government has planned to increase this capacity to 1.8 million barrels per day in the near future.
Analysts predict a wide range of scenarios regarding oil prices, depending on the duration and extent of any potential closure. Deutsche Bank estimates that a total shutdown disrupting 21 million barrels per day for two months could push oil prices beyond 120 dollars per barrel. Rabobank suggests prices could even spike to 150 dollars per barrel, recalling that Brent briefly reached 139 dollars in 2022 following Russia’s invasion of Ukraine.
But it’s not just oil that flows through Hormuz. Liquefied natural gas (LNG) is even more vulnerable, as 20 percent of global LNG trade passes through the strait, including all exports from Qatar, the world’s second-largest LNG exporter. Eighty percent of these volumes are destined for Asia, while Europe receives about 20 percent, meaning any disruption would intensify competition between regions. Qatar has already taken precautions, instructing LNG vessels to wait outside the Strait of Hormuz until they are ready to load. This decision reflects the level of concern among major energy exporters.
There is also the matter of non-energy goods. Ports in the Persian Gulf, such as Jebel Ali and Khor Fakkan, have become significant global transshipment hubs, with feeder services extending into the Persian Gulf, South Asia and East Africa. A considerable portion of cargo from these ports is bound for Dubai, which has established itself as a key transshipment centre linking large container ships to smaller feeder vessels operating across a vast region from the Persian Gulf to South Asia and East Africa. Disruption or delays in this supply chain would have knock-on effects across a wide area, causing logistical breakdowns and port congestion.
The maritime insurance sector has been quick to respond, with premiums already rising for ships transiting Hormuz. According to Marsh McLennan, the world’s largest insurance broker, hull and machinery insurance costs for vessels operating in the region have risen from 0.125 percent to 0.2 percent of the ship’s value, an increase of over 60 percent. This means insuring a 100 million dollar ship now costs around 200,000 dollars, up from the previous 125,000 dollars. War risk premiums for Red Sea transits have also climbed, while coverage for Israeli ports has tripled to 0.7 percent. Additionally, the validity period of insurance quotes has been halved from 48 hours to 24, signalling the growing volatility of the market.
