The strait of Hormuz at risk: Israel-Iran conflict threatens global supply chains

As the Israel-Iran conflict simmers dangerously, a crucial question looms over the world economy: What happens if the Strait of Hormuz is disrupted? The answer is simple—but chilling. It could ignite a global economic shockwave, with devastating consequences for billions, especially in the fast-growing but fragile economies of South Asia, Southeast Asia, and the Gulf.

The escalating tensions between Israel and Iran are no longer a regional dispute. Both countries have vast networks of proxy forces, allies, and adversaries scattered across the Middle East. What began with covert operations and drone strikes now risks becoming a direct and sustained military confrontation—one that could spiral into something much bigger.

The Strait of Hormuz, a narrow waterway between Iran and Oman, is arguably the world’s most critical energy chokepoint. Over 20% of global oil—about 17 million barrels a day—passes through this strait. Nearly one-third of the world’s liquefied natural gas (LNG) flows through here. Gulf countries like Saudi Arabia, UAE, Kuwait, Qatar, and Iraq rely on this passage to export their oil and gas. This energy fuels everything—from factories in Vietnam and cars in Germany to heating homes in Japan and powering smartphones in India.

Iran has long threatened to block the Strait of Hormuz if it is attacked or economically cornered. If this happens—whether fully or partially—it could trigger an oil price surge (up to $150 per barrel or more), cause global inflation to spike dramatically, lead to delays and cost hikes in every supply chain dependent on energy and transport, and risk naval confrontations involving the U.S., Gulf navies, and global oil tankers.

Not all nations are equally vulnerable. Ironically, the fastest growing economies with the most promise may face the harshest impact. Countries most affected include India, Bangladesh, Pakistan, Sri Lanka, Vietnam, Indonesia, Philippines, Thailand, and the Gulf states. Europe and China will also feel the impact but are better positioned to absorb it. The United States and Canada will be least affected due to energy independence and diversified sources.

The real cost will be human: children skipping meals because of food inflation, families unable to afford gas or electricity, small businesses closing due to unaffordable transport and materials, and job losses in factories and farms. In humanitarian terms, the ripple effect may be worse than COVID-19 in the developing world.

While war may not be in the hands of ordinary citizens, leaders and institutions must act now to mitigate the damage. Short-term measures include diplomatic de-escalation, use of strategic reserves, and subsidies for essential sectors. Long-term strategies must focus on energy diversification, regional renewable investment, and supply chain resilience.

This crisis reminds us that in today’s interconnected world, a conflict between two nations can become a calamity for many others—especially the poor and vulnerable. The world must wake up not just to prevent war, but to protect humanity from its economic aftershocks. When the Strait of Hormuz is blocked, it’s not just tankers that stop moving.

K M Zainul Abedin: retired engineer.