Fears of a potential closure of the Strait of Hormuz by Iran are mounting after Iranian authorities and parliament threatened action in response to U.S. airstrikes on Iranian nuclear sites over the weekend.
The Strait of Hormuz, a narrow but strategic waterway, handles nearly 20% of the world’s total oil and natural gas shipments. It is a vital corridor for energy exports from Gulf Cooperation Council (GCC) countries including the UAE, Saudi Arabia, Kuwait, Qatar, Iraq, and Iran.
If Iran moves forward with closing the strait, analysts warn it could lead to:
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A sharp rise in global oil prices
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Inflationary pressure across multiple industries
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Disruption of global supply chains, especially for oil-dependent sectors like manufacturing and steel
In the Iranian year ending March 2025, Iran exported $67 billion worth of oil, with China purchasing up to 90% of those exports. Asian economies, which source around 80% of their hydrocarbon needs via the Strait, would be among the hardest hit by any disruption.
Reports indicate that the U.S. has urged China to leverage its influence to de-escalate the situation, underlining the potential for severe economic fallout worldwide.
For industries like steel, the impact could be direct and swift. Higher oil prices would increase fuel and production costs, particularly in regions like the GCC, which imports significant volumes of hot-rolled coil (HRC), billets, large beams, and flat steel products. These added costs are likely to be passed on to end users, exacerbating inflationary trends already pressuring global markets.
The last serious threat to the strait’s operation came in the 1980s during the Iran-Iraq war, but trade has never been fully blocked. However, current geopolitical tensions are raising alarms that this time may be different.
VietnamSteel by Hoa Sen Group
