Strait of Hormuz closure, how will it affect the global economy and financial markets

WealthCoffee · 2026-03-11T03:31:32+00:00

Iran announces closure of the Strait of Hormuz due to attacks by the United States and Israel, impacting global energy transportation. The narrowest part of the strait is only 38.9 kilometers, and Iran has the capability to impose a blockade using conventional weapons and drones. The credible threat may lead relevant parties to adjust their behavior, such as insurance companies refusing coverage.

WealthCoffee

2026-03-11 03:31:32

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On March 2, 2026, in retaliation for the attacks by the United States and Israel on Iran, Iran announced the closure of the Strait of Hormuz. This strait is a vital route for global energy transportation, through which crude oil and natural gas from the Persian Gulf coast are exported. Approximately one-fifth of the world’s oil shipments pass through this strait. As one of the top three exporters of liquefied natural gas, Qatar nearly all of its LNG exports are shipped via the Strait of Hormuz, accounting for about 20% of the global supply.

Does Iran have the capability to block the Strait of Hormuz?

Yes. The narrowest point of the Strait of Hormuz is only 38.9 kilometers, within the range of conventional artillery. Iran can also attack ships with drones. Because Iran’s threats are credible, other relevant parties will adjust their expectations, aiding in the closure of the strait. For example, insurance companies may refuse to cover ships, and crew members facing life-threatening danger may also refuse to transit the strait.

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