Oil and Gas Transit Through the Strait of Hormuz May Never Return to Pre-War Levels
Iran’s blockade of the Strait of Hormuz has sparked the most significant disruption to global oil supplies in history, intensifying pressure on the United States to negotiate a deal as the threat to the global economy escalates daily. Tehran seems determined to leverage this strategic advantage to solidify its control over the vital waterway in any settlement that brings an end to the ongoing conflict.
According to Amos Hochstein, a former senior energy and national security advisor to President Joe Biden, leaders across the Middle East already believe that Iran has effectively taken control of the Strait of Hormuz. Speaking on CNBC’s “Squawk Box” on Thursday, Hochstein emphasized, “No matter what happens, the Iranians will control the Strait of Hormuz for the foreseeable future. It doesn’t even matter what the deal says. Everybody in the region believes that.”
Helima Croft, head of global commodity strategy at RBC Capital Markets, added that the volume of oil tanker traffic through the Strait of Hormuz before the war likely represents the peak level of transit for the foreseeable future. This suggests that even if a diplomatic resolution is reached, the flow of oil through this critical chokepoint may not return to its previous highs, reflecting a lasting shift in regional power dynamics and global energy markets.
According to Richard Meade, editor-in-chief of Lloyd’s List, traffic through the Strait of Hormuz could eventually recover to around 60% to 70% of its pre-war volume. However, not all vessels would receive equal treatment. Meade, as cited by CNBC, noted that Iranian forces controlling the Strait are likely to grant preferential passage to Chinese ships, while Western vessels may be required to pay for transit rights.
