What if the Strait of Hormuz is Closed for Another Year?

Introduction

On 2 March 2026, Iran declared the Strait of Hormuz closed, and the world changed overnight.

What began as an escalation of the conflict involving Iran, Israel, and the United States has become, in the words of FAO Chief Economist Máximo Torero, "one of the most rapid and severe disruptions to global commodity flows in recent times." In a matter of days, outbound crude oil shipments from the Persian Gulf fell to virtually zero, LNG tankers anchored and waited, fertiliser vessels diverted, and the four largest container shipping lines suspended all transits.

We are now more than three months into that closure. The question that economists, logistics managers, governments, and ordinary consumers are all asking is the same: What if the Strait of Hormuz is closed for another year?

To understand the answer, you first need to appreciate the scale of what flows through that 33-kilometre-wide channel every single day. Roughly 20% of the world's daily oil supply and 20% of global liquefied natural gas (LNG) pass through the Strait of Hormuz. Around 27% of the world's maritime crude oil trade depends on it. Nearly 15 million barrels of crude oil per day, representing approximately 34% of all globally traded crude, transited the Strait in 2025. China and India alone received 44% of those exports. The Strait is, quite simply, the jugular vein of the global energy system.

Here is a sector-by-sector look at what a full year of closure would mean.

The Freight and Shipping Industry

The immediate impact on global shipping has been structural and severe. The four largest container shipping lines; Maersk, MSC, CMA CGM, and Hapag-Lloyd, all suspended Strait transits within 48 hours of the closure. Over 150 tankers anchored outside the Strait rather than risk attack. Jebel Ali Port in Dubai, the largest container port in the Middle East and a critical transshipment hub for Asia, Europe, and Africa, rapidly became congested as vessels with no viable onward route piled up.

The most significant immediate rerouting option is the Cape of Good Hope, sailing around the southern tip of Africa. But this route adds approximately 10–14 days to journey times and significantly increases fuel consumption, crew costs, and vessel charter rates. Insurance premiums have surged, with marine bunker fuel costs rising by an estimated $200–500 per tonne for vessels forced to source fuel outside affected regions.

Compounding the problem is the simultaneous disruption in the Red Sea. The Houthis, seizing the moment, resumed attacks on Red Sea shipping in late February 2026, reversing every fragile gain made since the October 2025 ceasefire. The Red Sea route to Europe, already operating at just 49% of pre-crisis capacity, effectively closed again. For the first time in modern history, both of the Middle East's two major maritime corridors are blocked simultaneously. Cargo stranded in the Persian Gulf has nowhere to go.

Global merchandise trade growth, which had been running at a healthy 4.7% in 2025, is now projected to slow to between 1.5% and 2.5% for 2026. A full year of closure would likely push this figure into negative territory. Price increases of 20% to 100% have already been reported across petroleum-based supply chains as of mid-2026. Consumer price indices have yet to fully reflect this, industrial input costs typically take several months to pass through to retail shelves, but the pain is accumulating.

Aviation Fuel

Aviation is one of the most directly and visibly affected sectors when energy prices surge. Jet fuel is a petroleum derivative, and airlines have among the thinnest operating margins of any major industry.

In March 2026, crude oil prices surged 64% following the Strait's closure. The impact on aviation fuel has been even more pronounced: jet fuel prices effectively doubled within weeks. European aviation authorities warned in April 2026 that a jet fuel shortage was expected to arrive "within weeks" as Middle Eastern refinery capacity, heavily integrated into global aviation fuel supply chains, became inaccessible.

Airlines are already responding. Airfare increases of 5–10% have been implemented, and fuel surcharges are appearing across routes worldwide. However, softening consumer demand is limiting how much of these higher costs can actually be passed on to travellers. Airlines are caught in a squeeze: costs are surging, but pricing power is weakening.

If this situation persists for a full year, the trajectory becomes deeply troubling. Current flight cancellations represent approximately 0.5–1% of total global seat capacity. Historical precedent from past energy shocks suggests disruptions of this kind do not scale linearly, they accelerate. By mid-to-late 2026, cancellations of 5% or more of global seat capacity are considered realistic if carrier balance sheets continue to deteriorate and fuel procurement becomes increasingly difficult.

The structural implication for a full-year closure is the potential insolvency of mid-tier carriers in energy-import-dependent regions — particularly South and Southeast Asia, sub-Saharan Africa, and parts of Latin America — where fuel hedging programmes are weaker and government support mechanisms more limited.

Liquefied Natural Gas (LNG)

The LNG disruption may prove to be the single most consequential long-term consequence of a prolonged Strait closure.

Qatar and the UAE together represent almost 20% of global LNG exports, and those exports transit exclusively through the Strait of Hormuz. On 4 March 2026, QatarEnergy declared force majeure on all LNG shipments following Iranian attacks on its Ras Laffan facilities. That single event removed approximately 20% of global LNG supply from the market overnight.

Europe, which has spent the years since the 2022 Ukraine war painstakingly reducing its dependence on Russian gas by pivoting to Qatari and American LNG, now faces a profound dilemma. LNG terminals require months to secure alternative cargoes from new suppliers. Refineries and power stations configured for specific gas grades cannot simply switch overnight.

Asian economies are equally exposed. Japan and South Korea are among the world's largest LNG importers, and both source heavily from the Gulf. A full-year closure would force both countries into a prolonged scramble for alternative supply, likely from the United States, Australia, and East Africa, but the infrastructure for rapid scaling simply does not exist at the required speed.

The medium-term consequence would be a sustained elevation of global natural gas prices, likely pushing European household energy bills significantly higher through the winter of 2026–27, undermining industrial competitiveness across the continent, and potentially triggering fresh energy poverty crises in countries that had only recently stabilised following the 2022 shock.

Fertilisers and Global Food Security

Of all the downstream consequences of a Strait of Hormuz closure, the threat to global food security may be the most severe and the least discussed in mainstream coverage.

Around 20% of global seaborne fertiliser exports originate from the Arabian Gulf. Natural gas is the primary feedstock for ammonia production, which is the foundation of most synthetic fertilisers. Approximately 35% of global ammonia production capacity depends on Gulf gas supplies. A prolonged closure therefore creates a double shock: it disrupts both the energy needed to produce fertilisers and the shipping routes through which finished fertiliser reaches global markets.

The cascading food-price logic works as follows: gas prices rise → ammonia production costs surge → fertiliser prices spike → farmers in import-dependent countries plant less or use cheaper, less effective inputs → crop yields fall → food prices rise 1–2 growing seasons later.

The critical amplifier is timing. Fertiliser buyers are typically locked into annual procurement cycles with no immediate ability to switch suppliers. For spring 2026 planting in the Northern Hemisphere, many farmers in import-dependent regions, particularly Brazil, India, South Asia, and parts of the EU, have already been warned of tightening availability. A closure extending through to spring 2027 would affect the following planting cycle as well, potentially triggering a compounding food security crisis.

Regional food price inflation of 15–25% is considered likely in the most import-dependent markets if agricultural input costs remain elevated. In the world's most vulnerable countries, the 3.4 billion people UNCTAD identifies as living in nations already spending more on debt than on health or education, this is not an abstract economic scenario. It is a food crisis.

Global Gas Markets and Domestic Energy Bills

Beyond aviation and LNG shipping, the knock-on effects on broader gas markets are significant.

Gas powers electricity generation, industrial processes, heating, and as noted above, fertiliser production. A sustained Hormuz closure strands not just Qatar's LNG but also pipeline gas infrastructure and processing facilities throughout the Gulf region. Saudi Arabia's Abqaiq-Yanbu East-West Crude Pipeline offers some partial bypass capacity for oil (estimated at 3–5 million barrels per day of spare capacity as of early 2026), but no comparable bypass infrastructure exists for natural gas.

For household consumers in the UK and Europe, the impact will show up in energy bills. The continent's electricity markets, still heavily gas-linked despite significant renewable expansion, will see prices elevated through any winter during which the Strait remains shut. In industrial terms, energy-intensive sectors, steel, cement, glass, ceramics, chemicals, will face input cost pressures that either compress margins, trigger production curtailments, or are passed on to consumers in the form of higher prices for finished goods.

Tourism: The Middle East and Beyond

Tourism to the Middle East has, unsurprisingly, collapsed. The Gulf's major tourism economies; the UAE, Qatar, Bahrain, Oman, and Saudi Arabia, have all seen dramatic drops in international arrivals. The UAE, which had positioned itself as a global tourism hub with over 17 million international visitors per year, faces a double blow: airspace disruptions and passenger reluctance to travel anywhere near an active conflict zone.

But the damage extends far beyond the region itself. The Middle East functions as a critical aviation hub for long-haul travel between Europe and Asia, and between Africa and Asia. Airspace closures and rerouting are affecting key global corridors, putting a meaningful share of Europe–Asia and North America–Asia travel at risk.

Travel and tourism represent approximately 10% of global GDP. Disruptions to this sector generate second and third-order economic contractions well beyond the aviation industry: suppressed hotel occupancy, reduced retail spending, and hospitality employment losses compound each other. Destinations in Southern Europe that depend heavily on long-haul Asian tourist flows; Italy, Greece, Spain, Portugal will feel the effects even if they are geographically remote from the conflict.

For the UK specifically, inbound tourism from Gulf states, historically a high-value segment of the leisure market, particularly in London will fall sharply. Outbound UK holidaymakers heading to Dubai, Oman, or Qatar face either suspended routes or significant price increases on available alternatives.

Developing Economies and Financial Markets

The financial consequences of a prolonged Strait closure fall hardest on the world's most vulnerable economies.

Investors have already begun pulling back from developing countries in response to energy-driven uncertainty. Weakening currencies, rising borrowing costs, and falling stock prices have been observed across multiple emerging markets since the closure began. Countries that import both oil and food, and that carry high existing debt burdens face a particularly brutal combination of pressures: rising import bills, currency depreciation, and tighter access to international credit simultaneously.

Global economic growth, which was tracking at 2.9% for 2025, is now projected to slow to 2.6% in 2026 and that projection assumes the conflict does not intensify further. A full year of closure, without further escalation, would almost certainly push that figure lower still.

What Are the Alternatives?

Several bypass options exist, but all come with significant constraints.

Saudi Arabia's East-West Pipeline connects Abqaiq on the Gulf coast to Yanbu on the Red Sea, with an estimated spare capacity of 3–5 million barrels per day for crude oil. This is the single most significant alternative route for Saudi exports. However, it cannot accommodate LNG, cannot handle the full volume of Gulf oil exports, and is itself a potential target in an escalating conflict.

The Cape of Good Hope route adds 10–14 days and significant cost to any vessel rerouting around Africa. For oil tankers, this is operationally viable at elevated cost. For time-sensitive container cargo, the implications for global just-in-time supply chains are severe.

Strategic petroleum reserves (SPRs) held by IEA member countries offer a buffer, but one that is finite. SPRs are designed to cover short-term disruptions of weeks to months, not a year-long closure of a major global energy corridor.

In practice, a full year of closure would require a fundamental, forced restructuring of global energy trade flows. Some of this restructuring, new long-term LNG contracts, accelerated pipeline investments, expanded US and Australian export capacity, would take years to complete. In the interim period, elevated prices, constrained supply, and heightened economic insecurity would be the defining features of the global economy.

Conclusion

The Strait of Hormuz closure is not, at its core, a shipping story. It is an energy story, a food story, a financial story, and for hundreds of millions of people in the world's most vulnerable countries, a human story.

A further year of closure would mean sustained high oil and gas prices, a structural shock to global LNG markets, a compounding fertiliser and food security crisis, an aviation industry under acute financial pressure, the potential collapse of tourism across an entire region, and macroeconomic headwinds that would disproportionately harm the countries least equipped to absorb them.

The Kiel Institute for the World Economy put it plainly in their March 2026 analysis: every week the Strait remains closed, developing countries lose real income that cannot be recovered. Multiply that by 52 weeks, and the scale of human cost becomes almost impossible to overstate.

De-escalation and the restoration of open maritime transit is not merely a geopolitical preference. For much of the world, it is an economic and humanitarian necessity.