Iran Votes to Block Strait of Hormuz What Could This Mean for the Global Economy

Iran Votes to Block Strait of Hormuz — What Could This Mean for the Global Economy?

1. Iran's Parliament Votes to Block the Strait of Hormuz

On the 22nd (local time), Iran's Parliament (Majlis) voted to block the Strait of Hormuz in response to the U.S. bombing of its nuclear facilities. According to the Iranian state media PressTV, Esmail Qasari, Chairman of the National Security Committee of the Parliament, stated that "the final decision rests with the Supreme National Security Council (SNSC)." This decision could significantly escalate geopolitical tensions in the region.

2. The Strategic Importance of the Strait of Hormuz

The Strait of Hormuz is located at the entrance to the Gulf and serves as a crucial oil and gas shipping route for the Gulf countries, including Iran and Iraq. The narrowest part of the Strait is approximately 33 km wide, and due to relatively shallow depths, the passage for large oil tankers is limited. As most of these large ships need to pass through Iranian territorial waters, Iran effectively controls the Strait.

3. Global Impact of the Hormuz Strait Blockade

The Strait of Hormuz accounts for about 25% of global oil consumption and about 20% of liquefied natural gas (LNG) consumption. If Iran blocks the Strait, global oil prices are likely to surge significantly. A disruption in the transportation of oil and gas through this vital route would create major challenges in global supply chains, potentially delivering a severe blow to the global economy.

4. Past Instances and Current Situation

During the Iran-Iraq War in the 1980s, both countries attacked each other's oil tankers and merchant vessels and laid mines in the Strait, threatening maritime passage. However, Iran never fully blocked the Strait during this time. The current situation differs significantly, and if Iran proceeds with a complete blockade, it could trigger an unprecedented international reaction.

5. Potential Surge in Global Oil Prices

If the blockade of the Strait of Hormuz is actually implemented, global oil prices are expected to rise sharply. If Iran gains control over the Strait and disrupts the transport of oil and gas, the impact on the global economy will be substantial. Countries that are highly dependent on energy will face significant economic challenges due to rising energy costs. Furthermore, a surge in oil prices could exacerbate global inflation and negatively affect economic growth.