Iran Wields Strait of Hormuz as Economic Weapon, but Its Power Has Limits

Iran has turned its ability to restrict shipping through the Strait of Hormuz into a potent economic weapon in the fight imposed by the US and Israel. Data from IMF PortWatch shows that in the seven days ending August 2, an average of only about 4 ships per day passed through the strait, compared with about 90 ships in the corresponding week of 2025. Estimated shipping throughput fell from 3.5 million tons to about 143,000 tons per day, a drop of roughly 96%.

This is not a temporary collapse but a prolonged disruption. Since February 28, both vessel traffic and estimated throughput have been far below the same period last year, with only brief recoveries. Tehran has shown it can seriously disrupt trade, and the question is no longer whether Iran can disrupt commerce through Hormuz but how effectively and for how long it can convert that disruption into political leverage.

According to the theoretical framework of political scientists Henry Farrell and Abraham Newman, states can turn control over central nodes in international networks into coercive power. At Hormuz, this critical node is physical, as geography gives Iran an advantage over a corridor on which energy producers, shipping companies, and importing economies still heavily depend.

The scale of that dependence shows Tehran's leverage. In 2025, nearly 20 million barrels of crude oil and petroleum products passed through Hormuz each day, about a quarter of global seaborne oil trade. About 80% of that oil went to Asia, with China and India receiving 44%. Qatar and the UAE also ship liquefied natural gas (LNG) equivalent to nearly one-fifth of global LNG trade through Hormuz, with no practical alternative route.

Economic effects begin before an official closure. Shipping and insurance companies react to perceived risk as much as to actual attacks. The mere threat of missiles, mines, drones, or ship seizures can raise insurance premiums, freight rates, and waiting times. Research published in Nature Communications shows that disruptions at maritime chokepoints transmit economic losses through delays, rerouting, insurance costs, and production stoppages.

Iran can pressure many actors at once. Gulf states face risks to export revenues, ports, and logistics. Major Asian importers such as India bear higher energy costs and supply shortfalls. The US imports relatively little oil through Hormuz but still suffers from global energy prices and the military cost of protecting shipping. Tehran's strongest leverage may come indirectly when it pushes Gulf governments and Asian importers to pressure Washington to de-escalate.

The consequences extend to less visible areas, including the artificial intelligence race. Gulf states are investing heavily in data centers and computing infrastructure, benefiting from cheap energy. By raising energy prices and risks for Gulf infrastructure, a Hormuz disruption could drive up the cost of expanding AI capacity, undermining economic diversification strategies.

Hormuz also carries goods less noticed than oil. Research in Nature Food shows that many major agricultural economies rely heavily on fertilizers exported through the strait. India imports about half of its ammonia and nitrogen fertilizers, around 9 million tons, from Gulf producers. A disruption would combine fertilizer shortages with higher gas and shipping costs, raising risks for crop yields and food prices in the short term.

Helium is another example of hidden dependence. Qatar and the UAE supply helium used in semiconductor manufacturing, medical imaging, scientific research, and clean technology. Helium is hard to store, liquefaction capacity is concentrated, and substitutes are few. Many economies accounting for more than 60% of global integrated circuit exports depend on helium shipped through Hormuz, linking a regional crisis to advanced manufacturing and health supply chains in Asia.

These vulnerabilities give Iran bargaining power, but they also define the limits of that power. First, disruption hurts Iran itself. Iran's oil exports, food imports, and maritime trade rely heavily on southern waterways. Saudi Arabia and the UAE have pipelines that can divert about 3.5-5.5 million barrels per day away from Hormuz. Iran's Jask terminal, located outside the strait, is barely operational. About 160 million of Iran's 170 million tons of annual foreign trade, or 94%, passes through southern ports. Northern ports handle only about 4% and could hardly exceed 10-15% even in a crisis.

Second, Iran can make shipping dangerous, but sustaining that disruption is costly. A US Congressional Research Service assessment concluded that Iran could disrupt shipping with mines, fast boats, submarines, missiles, and aircraft, but US forces could restore traffic afterward, although it might take days, weeks, or months. Iran's advantage lies in imposing uncertainty and delay, but that uncertainty also damages its own economy. Iran's military spending in 2025 is only about 2% of GDP, compared with 3% in the US and 5-8% in Kuwait, Oman, Saudi Arabia, and Israel.

Third, repeated use of Hormuz as a weapon will spur adaptation. GCC energy producers will have incentives to expand pipelines to the Red Sea and the Gulf of Oman. Importing countries will diversify suppliers, invest in strategic reserves, and develop alternative sources of LNG, fertilizers, and critical materials. After Russia's invasion of Ukraine, governments, especially in the EU, treated renewable electricity as a security asset. The International Energy Agency has raised its five-year forecast for global renewable capacity expansion by nearly 30%.

These adjustments will be gradual. Alternatives cannot quickly replace oil in transport, LNG in some power systems, gas in fertilizer production, or helium in specialized applications. Low-income countries also face financial and institutional constraints. Even so, prolonged insecurity strengthens the economic case for projects that reduce dependence on Hormuz.

Tehran faces a difficult trade-off. Limited disruption can raise the cost of US military pressure, divide opposing coalitions, and open bargaining space on sanctions and regional security. But prolonged disruption will damage Iran's economy, alienate Asian partners like China, and accelerate investments that weaken future leverage. Hormuz is a powerful economic weapon, but its effectiveness has a shelf life. Each time Iran uses it more aggressively, it gives others more reason to reduce dependence on the strait, and the weapon quickly dulls.