The Strait of Hormuz: A Double-Edged Sword for Iran’s Economic Clout

The Iranian regime has wielded its control over the strategic Strait of Hormuz as a potent economic weapon in its ongoing conflict with the US and Israel. However, beneath this surface-level dynamic lies a more nuanced reality that highlights both the limits of Tehran’s leverage and the potential risks to global trade.

Since February 28, Iran has deliberately disrupted commercial passage through the strait. Ship traffic has plummeted by 96%, from an average of 90 vessels per day in the same period last year to just four ships per day over the past seven days. The estimated transit volume has dropped from 3.5 million metric tonnes per day to a mere 143,000.

The concept of “weaponised interdependence” comes into play here. Political scientists Henry Farrell and Abraham Newman describe how states can leverage control over critical nodes in international networks to exert coercive power. Iran has successfully exploited this principle through its dominance over Hormuz, which grants it significant leverage over a vital corridor used by energy producers, shipping companies, and importing economies.

The scale of dependence on the strait is telling: almost 20 million barrels of crude oil and petroleum products crossed Hormuz each day in 2025, accounting for one-quarter of global seaborne oil trade. Asia accounted for a staggering 80% of these flows, with China and India alone receiving 44% of the crude oil passing through.

However, this leverage comes with an expiry date. Disruption at Hormuz has far-reaching consequences, including higher energy costs and possible supply shortages for major Asian importers like India. The US remains exposed to rising global energy prices and military costs associated with protecting commercial navigation.

But what about Iran’s own interests? The regime’s economic reliance on southern ports and its vulnerability to disruption are often overlooked in the heat of conflict. A prolonged interruption would deprive Tehran of export earnings while exacerbating inflation and shortages at home. The US blockade of Iran’s southern ports only compounds this vulnerability, affecting nearly 94% of its annual foreign trade.

This delicate balance highlights the double-edged nature of Iran’s control over Hormuz. While it can exert pressure on Gulf states and Asian importers to push Washington for de-escalation, a prolonged disruption would ultimately weaken Tehran’s own economic clout.

The implications extend beyond traditional security concerns, too. The emerging competition over artificial intelligence is a case in point: Gulf states’ investments in data centres and computing infrastructure are threatened by rising energy prices and increased risks to their infrastructure. Disruption at Hormuz can also impact the supply of essential commodities like fertilisers and helium, further entangling regional security with global trade and industry.

As tensions persist over the Strait of Hormuz, it’s clear that neither side has a decisive advantage. Iran’s economic clout may be significant, but its reliance on Hormuz also defines its limits. The consequences of this conflict will only grow more complex as time passes - one thing is certain: the stakes are higher than ever for global trade and regional security.