More Than Military Might: The Strait of Hormuz and Economic Warfare

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This article was originally published on Jul 7, 2025.

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Tensions between the US and Iran have continued to escalate as Trump directly intervened in the ongoing conflict between Israel and Iran. As relations continue to deteriorate, with Iran’s Foreign Minister Araghchi stating that the US crossed “a very big red line” after their attacks on Iranian nuclear sites, Tehran is weighing possible responses for retaliation. One possibility is the looming threat of the Strait of Hormuz being closed - a narrow but critical waterway that has a major role in global trade. In an increasingly interconnected global economy, the potential for a relatively smaller country to leverage key infrastructure against a nation considered to be a superpower reveals a deeper reality about globalisation. While it has helped to increase global prosperity, it also comes with new forms of strategic risks that leaders must consider.

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The Strait of Hormuz is a commercial trade pathway that is critical to global energy security – in 2024, oil flow through the Strait averaged 20 million barrels per day which is equivalent to 20% of global oil consumption. There have been past threats from the Iranian government to close the Strait such as during the Iran-Iraq war, where they participated in the so-called ‘Tanker Wars’ in the Persian Gulf. This caused immediate market panic, demonstrating that even just the potential threat of closure can cause just as much fear for the global economy. Any interference, big or small - complete closure or a partial block - would be enough to start a chain reaction starting from a spike in oil prices. Oil that flows through the Strait is transported across the world, for example, to the US, Europe, and Asia. A closure would therefore create global economic disruption because of how deeply integrated global trade networks have become.

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The reliance globalisation creates leads to countries like the US being very economically vulnerable. Globalisation has brought large benefits for all such as greater access to goods and services and more opportunities for creative destruction and innovation, but it comes with a new set of responsibilities. Energy prices are notoriously unstable, yet demand for it is constant, making the Strait of Hormuz a source of strategic vulnerability. Although there are alternative supply routes, the volumes that they can transport are quite inadequate when dealing with global demand.

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Furthermore, inflation in many countries, especially the US, remains fragile despite recent improvements, and cost of living pressures can still be felt, so these economies cannot afford economic instability soon after they have promised their citizens otherwise. Impacts can already be felt as there is evidence of a slowdown in shipping navigation through the Strait of Hormuz following the US’ aggression against Iran, illustrating how interdependence can be weaponised by those that hold power over key inputs. Tehran understands that controlling a single chokepoint can neutralise traditional methods of power, namely the US’ military prowess. New pressure points like this can be used to challenge superpowers on more equal terms, meaning that Trump and his administration must not overlook these vulnerabilities before taking further aggressive action, as it will not only affect them but their allies as well.

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The ongoing tension acts as a reminder that in a globalised world, economic power and military power cannot be separated. Trump’s rhetoric of ‘America First’, with its promise of reclaiming what has been ‘stolen’, falters when considering the complete overhaul it would take to change the dynamic of global integration that currently underpins the global economic system. The current global economy operates under global governance and greater interdependence, so for all the West’s military strength, their economic exposure should not be treated as an afterthought in foreign policy decisions. Economic action can be just as dangerous as military force, perhaps even more so. Leaders who ignore this reality do so at their own risk.