What If the Strait of Hormuz Never Reopens?

By James Hall,
Co-author of the popular The Sword of Damocles: Our Nuclear Age, now on Audible, Kindle and Amazon books.
jameshall042999@gmail.com

“From these waters, the world lived—now it trembles.”

Art and poetry by James Hall

(This composition draws strongly from the spirit of Francisco Goya’s Black Paintings—dark, haunting, and emotionally heavy. The scene is set on a shadowed sea, representing the Strait of Hormuz, but rendered not as a modern geopolitical map, but as a timeless human tragedy.)

Realistically, the crisis with Iran and the situation in the Persian Gulf are not going to end anytime soon. Iran quite literally has the United States over a barrel.

Over the past year, the oil market has gone through a dramatic shift, which is why it feels so confusing right now. In 2025, oil prices were relatively low because the world was producing more oil than it needed. Supply exceeded demand, stockpiles grew rapidly, and prices fell into a comfortable range.

But that situation has changed quickly in 2026.

A major geopolitical disruption—centered around the Strait of Hormuz, one of the most important oil shipping routes in the world—has significantly reduced the flow of oil to global markets. This route normally carries about 20% of the world’s oil supply, so even partial disruption has a major impact.

As a result, the market has tightened. But the issue goes beyond simple supply and demand. The global oil system is not only tight—it has become highly interconnected and increasingly fragile. A disruption in one region no longer stays contained; it spreads quickly through shipping, insurance, financing, refining, and logistics. Even small interruptions can have outsized effects. In that sense, the problem is not just that there may be less oil, but that the system delivering it now has far less room for error than it once did.

At the same time, inventories that were once building are now falling sharply, as countries draw down stockpiles to make up for lost supply. Prices have become volatile—rising on fears of shortages, then pulling back as markets reassess how long the disruption might last.

Layered onto this fragility is the geography of global energy itself. The system depends on a handful of narrow maritime chokepoints—the Strait of Hormuz, the Suez Canal, the Panama Canal, and the Strait of Malacca—through which enormous volumes of oil and fuel must pass. When even one of these corridors is disrupted, the effects are felt far beyond its immediate region, forcing shipments onto longer routes, increasing costs, and straining already tight logistics networks. What appears to be a localized disruption quickly becomes a global problem, underscoring how dependent the modern economy remains on a few critical, and vulnerable, passages.

The effects are not being felt evenly across the world. Asia, which depends heavily on imported oil—much of it from the Persian Gulf—has been hit particularly hard. Governments there are already taking steps to conserve energy, including encouraging work‑from‑home policies, limiting travel, and even rationing fuel in some cases. These measures are early warning signs of what tighter supply looks like in practice.

In contrast, the United States is somewhat more insulated because it produces a large share of its own oil. Americans are therefore unlikely to experience physical shortages, but they will feel the impact through higher gasoline prices—especially as summer driving demand increases. However, as I noted in an earlier article, the roughly 130 US refineries have, over the past fifty years, been retooled to operate within a global supply chain rather than to ensure true domestic independence. As a result, the United States is not fully energy independent. While it is a net exporter of refined petroleum products, it remains a net importer of crude oil. The US imports several million barrels of crude each day—primarily heavier, sour grades from Canada (which accounts for more than half of imports), along with supplies from Mexico, (with Venezuelan imports having declined in recent years) and other countries. These heavier crudes are well-suited to many US refineries, which were upgraded over past decades to process lower-quality, sour oil. This has created a structural mismatch: while domestic production has increasingly shifted toward lighter shale oil unlocked through fracking, many refineries still rely on imported heavy crude to operate efficiently.

This brings us to the bigger question: could the world adapt if that large share of oil from the Persian Gulf were reduced permanently?

The answer is yes—but not quickly or easily. The real question may not be when stability returns, but whether the system has entered a new normal.

In the short term, losing such a large portion of global supply would be painful. Prices would rise, economies would slow, and governments would take emergency steps to reduce consumption. This is already happening in small ways. In the medium term, other oil producers—such as the United States, Brazil, and Canada—would increase output, and global trade routes would adjust. But replacing that much supply takes time, because it depends on infrastructure, investment, and logistics.

At the same time, demand would begin to change. People would drive less, companies would become more energy‑efficient, and governments would push harder toward alternatives such as electric vehicles, renewable energy, and other technologies. In other words, part of the adjustment would come not from replacing supply, but from using less oil in the first place.

What should concern Americans even more than gasoline is diesel. Diesel is the backbone of the US economy—it powers trucks, trains, ships, and much of the heavy machinery that keeps supply chains moving. It is not simply another fuel, but the foundation of the entire economic system.

Gasoline largely reflects consumer demand, but diesel underpins freight, agriculture, construction, and industry. When diesel prices rise, the impact extends far beyond the pump, feeding directly into transportation costs, supply chains, and ultimately the price of goods themselves. Delivery times stretch, operating costs increase, and the effects ripple quietly but forcefully through the economy. Unlike gasoline, there are few viable substitutes at scale, which makes diesel markets more rigid and more vulnerable under stress. In that sense, diesel does not merely track the cost of energy—it transmits it, amplifying its effects throughout the broader economy.

These pressures do not remain confined to energy markets—they feed directly into the broader economy. Higher fuel and transportation costs raise the price of moving goods, which in turn lifts the cost of everything from food to manufactured products. Businesses pass these costs along, consumers absorb them, and central banks are often forced to respond by keeping interest rates higher for longer. The result is a feedback loop in which energy instability contributes not just to inflation, but to slower growth as well. In this way, what begins as a supply disruption in oil can evolve into a much wider economic constraint.

Layered onto these economic pressures is an equally important political risk. When energy markets tighten and prices rise, governments rarely remain passive. Instead, they tend to intervene—through subsidies, price controls, strategic stock releases, or even export restrictions designed to protect domestic supply. While often necessary in the short term, these measures can distort markets, reduce transparency, and shift shortages from one region to another. In this way, the response to energy instability can itself become a source of further instability, compounding the very pressures policymakers are trying to contain.

Over a longer period—measured in years rather than months—the world could adapt to a new balance. Energy systems would become more diversified, reliance on any single region would decrease, and the global economy would gradually stabilize. But that transition would likely involve higher energy costs and slower growth along the way.

So where does that leave us right now? I can be summarized this way:

In the near term, oil prices are likely to remain volatile—moving up and down based on news about supply disruptions and geopolitical developments. Gasoline prices in the United States are likely to drift upward in the coming weeks, but probably gradually rather than dramatically unless there is another major shock. Diesel, however, may feel stronger upward pressure, as tighter refining capacity and freight demand make it especially sensitive to supply disruptions. Diesel will be a critical linchpin and could prove to be the most disruptive factor.

The world has moved from a situation of oversupply to one of sudden disruption, and it has not yet settled into a new normal. That is why the signals seem mixed. Yet to be fair, the warfare in the region has been absolutely chaotic. Few truly believe the official and optimistic messaging these days. The more difficult question may be whether what we are witnessing is no longer a temporary disruption—but the new normal itself.

Michael and James Hall, authors of the popular The Sword of Damocles: Our Nuclear Age, now on Audible, Kindle and Amazon books.