As fighting in Iran boils over, probably the most strategic oil passageway on this planet – the Strait of Hormuz – is within the highlight.
Concerns have been raised about just disruptions to the flow of Gulf oil shipments to Europe, the US and Asia after Iran said it was ‘closing’ the shipping lane.
A few fifth of the world’s oil is transited through the shipping lane, which splits Iran on one side and Oman and the UAE on the opposite, and links the Persian Gulf to the Gulf of Oman and the Arabian Sea within the Indian Ocean.
Iran’s attacks on neighbouring Gulf States have prompted major energy corporations, like QatarEnergy, to halt the production of liquefied natural gas, and global prices have already spiked.
Here’s how the closure of considered one of the most important shipping lanes could affect the world.
What does this mean for energy prices?
The UK imports oil and liquefied natural gas (LNG) from a spread of places, not only the Middle East.
Nevertheless, if supplies passing through the Strait of Hormuz are disrupted, then demand for alternatives goes up and there might be a major rise in gas and electricity prices, which is what happened after Russia’s invasion of Ukraine in 2022.
David Aikman, director of the National Institute of Economic and Social Research, warned: ‘If it persists, it is going to raise household bills and business costs within the months ahead, putting renewed upward pressure on inflation.”
Petrol stations across the UK are already seeing ‘sorry we’re out’ signs as gas prices skyrocket and other people look to fuel up.
Drivers have been told ‘to not panic buy’ by the AA as oil prices have subsequently skyrocketed, with the worldwide benchmark Brent crude increasing by 13% – the very best level recorded since July 2024.
In Greater Manchester, dozens of vehicles were seen waiting for petrol on the Trafford Centre.
And in Kirkdale, Liverpool, queues for pumps stretched beyond stations and into nearby roads.
Shop prices could increase as well
UK retailers are bracing for knock-on effects that would reach British shoppers in the shape of higher prices and fewer discounts.
Again, the impact will rely on how long the conflict lasts, but rising oil and shipping costs alongside disruption to provide routes and raw materials could begin to filter through to buy prices within the months ahead.
Analysts have said specific categories to look at include fragrance, because the Middle East plays a key role in producing ingredients utilized in many perfumes, particularly oud and other luxury scent bases.
The countries currently affected by conflict are also significant producers of dates, olive oil, nuts and spices comparable to saffron.
Nevertheless, fashion, electronics and homeware is also affected if freight costs increase or delivery times lengthen, as many UK brands depend on global supply routes that go through or near the region.
Why is the Strait of Hormuz so essential?
Tankers collecting from various ports on the Persian Gulf must undergo Hormuz, a 60-mile-wide a part of the Persian Gulf which has been at the guts of regional tensions for many years.
Although most chokepoints might be bypassed through the use of other routes, which frequently add significantly to transit time, some don’t have any alternatives.
Maritime ship experts say shipowners are increasingly wary of using the waterway, with some ships having tightened security and others cancelling routes there.
Can Iran actually close the Strait of Hormuz?
Technically, yes.
The UN allows countries to exercise control of their territorial seas as much as 13.8 miles from their coastlines, and a few portions of the Strait lie entirely in Iran and Oman’s territorial waters.
Iran’s navy has been severely damaged by strikes, and it stays unclear just how it could have the manpower to shut it down, but experts warned the IRGC could lay mines using fast attack boats.
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