The Middle East’s hard-to-heal scar from the Hormuz shock
The closure of the Strait of Hormuz not only paralyzed energy flows, but also left a psychological "scar," forcing Middle Eastern countries to change their strategic calculations.
After three weeks of fighting, the war involving the US, Israel and Iran has shattered the fragile balance among the Gulf’s oil powers. The conflict quickly expanded beyond the military sphere, as Iran’s energy infrastructure and that of US allies became targets in retaliatory strikes.
For the first time in decades, Iran closed the Strait of Hormuz, the route that carries about 20% of global crude oil and liquefied natural gas (LNG) supplies. The move left oil and LNG tankers stranded, put insurance and shipping markets under strain, and sent energy prices soaring.
Analysts likened the move to a cut into one of the "arteries of the global economy," leaving a hard-to-heal scar on both the Middle East and the global energy market. It will reshape trade flows, investment decisions and risk calculations for years to come.
IRGC boats maneuver around an oil tanker during drills in the Strait of Hormuz on Feb. 17. Photo: AFP
Hormuz aftereffects
Iran has warned that shipping through Hormuz will not return to its pre-war state, and that even if the sides agree to a ceasefire, trust cannot be restored overnight. An international protection mechanism for vessels passing through the Strait of Hormuz will likely still be needed long after the conflict ends.
Meanwhile, the US has so far been unable to establish a naval coalition to escort oil tankers through Hormuz, underscoring both the political and logistical complexity of ensuring the safety of this "chokepoint."
The US and Israel both say they have significantly degraded Iran’s military power, but Tehran can still disrupt the Strait of Hormuz without advanced weapons. Low-cost asymmetric measures such as mines, unmanned aerial vehicles (UAVs) and unmanned suicide boats (USVs) are enough to force cargo ships to divert or slow down.
"Over the past several decades, Iran has built up a large number of anti-access/area-denial systems," said Michael Eisenstadt, director of the Military and Security Studies Program at The Washington Institute for Near East Policy, citing examples such as anti-ship cruise missiles, mines, submarines, air defense missiles and UAVs.
Shipowners and insurers will remain more wary of the Gulf even if Hormuz reopens, because of the risk that their vessels could come under Iranian attack at any time, driving related costs higher.
Rebuilding trust will take time, as shown by the Red Sea shipping route. In November 2023, Yemen’s Houthi forces began attacking vessels linked to the US and Israel in the waterway to show support for Palestinians during the Gaza war. Those attacks stopped in October 2025, but vessel traffic there has recovered to only about 60% of its previous level.
Once a route is seen as dangerous, its psychological "scar" lasts longer than the sound of gunfire, said Ron Bousso, a Reuters columnist.
A hard-to-heal scar
The war will leave deep and lasting consequences for the Middle East’s oil and gas industry. For decades, the region’s energy powers largely avoided direct military confrontation, instead competing quietly while maintaining oil and gas flows.
Tensions between Saudi Arabia and Iran have largely played out through proxy wars in Yemen and Libya. The most serious case came in 2019, when the Houthis launched missiles and UAVs at Saudi energy infrastructure, temporarily halving the kingdom’s oil output.
The Organization of the Petroleum Exporting Countries (OPEC), whose membership is concentrated in the Gulf, has repeatedly weathered regional tensions such as the 1990-1991 Gulf War and the 2003-2011 Iraq War without allowing exports to be disrupted for a prolonged period.
But this latest war involving the US, Israel and Iran has completely upended those calculations. Gulf producers will likely have to reassess operations and accelerate efforts to reduce dependence on the Strait of Hormuz.
During the 1980-1988 Iran-Iraq War, when a series of tankers were sunk in the Gulf, Saudi Arabia built a large east-west pipeline linking refining complexes in the east to the export gateway of Yanbu on the Red Sea coast.
Oil exports from Yanbu are on track to hit a record high in March, and will likely remain there over the long term. That is creating a structural shift in regional trade flows.
Other producers will also seek to diversify export routes. Iraq could push to expand the capacity of the northern pipeline from Kirkuk to Turkey’s Mediterranean port of Ceyhan, while the United Arab Emirates (UAE) could increase capacity at the Fujairah oil port on the Gulf of Oman. These projects are costly and politically complex, but the war has shown that the cost of inaction is even higher.
Location of the East-West pipeline and the Habshan-Fujairah pipeline. Graphic: WSJ
Importing countries must also adjust their strategies, seeking alternative supplies even if that means higher shipping costs and lower efficiency. Strategic stockpiling, diversification and contingency planning, once seen as expensive insurance policies, are now becoming essential requirements.
"The key point when it comes to the Strait of Hormuz is that there really is no other outlet for energy flows on this scale," Joel Hancock, an energy expert at Natixis CIB, told TIME. "The Strait of Hormuz is a chokepoint in the truest sense, because there are almost no alternative export routes."
Nhu Tam (According to Reuters, AFP, TIME)
