July 02, 2025

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Strait of Hormuz: What happens if Iran shuts global oil corridor?

Strait of Hormuz: What happens if Iran shuts global oil corridor?

Summary

The Strait of Hormuz is a critical waterway where about 20% of the world's oil and gas is transported. There is concern that if Iran decides to close this strait, it could significantly affect the global economy by increasing oil prices and causing disruptions in trade. Many countries, especially in Asia, rely heavily on oil transported through this channel.

Key Facts

  • The Strait of Hormuz is a narrow waterway between the Gulf and the Arabian Sea.
  • Around 20% of global oil and gas passes through this strait.
  • Major oil producers like Iraq, Saudi Arabia, and the UAE use this route for exports.
  • In the first half of 2023, about 20 million barrels of oil went through the strait daily.
  • Closing the strait could raise oil prices and disrupt world markets.
  • China, India, and Japan are major importers of oil from the strait.
  • Iran's decision to close the strait would be made by its Supreme National Security Council and Supreme Leader.
  • A closure could lead to higher costs for goods and services globally due to increased production and shipping expenses.

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