The Strait of Hormuz is no longer merely a narrow maritime corridor through which oil and gas tankers pass. Over recent weeks, it has become the center of the most serious challenge facing the global economy in years. The renewed closure of the strait for the second time in less than two months has done more than disrupt energy markets. It has pushed the world into a new phase defined by persistent uncertainty.

 

For decades, the global economy operated on the assumption that geopolitical crises were temporary and that markets would eventually return to normal. What is happening today is fundamentally different. Investors, companies, and governments are no longer treating the risk as an exceptional event. They are beginning to regard it as a permanent feature of the global economic landscape.

 

Nearly 20 per cent of global oil trade passes through the Strait of Hormuz, equivalent to around 20 to 21 million barrels per day. In addition, almost 25 per cent of global liquefied natural gas trade depends on the same route. Any disruption in the strait therefore extends far beyond the Gulf region. Its impact is felt immediately in Europe, Asia, and the United States. With every additional day that the strait remains closed or heavily restricted, the costs of energy, transport, and insurance rise, while the resulting losses spread across industry, food, pharmaceuticals, and services.

 

Markets are no longer worried only about the interruption of supplies. They are increasingly concerned about the possibility that the crisis itself may be repeated. This has created what can be described as a “permanent risk premium.” Oil prices, shipping rates, and insurance costs no longer rise only during periods of closure. They remain elevated even after the strait reopens, because businesses and investors now assume that the disruption could return at any time.

 

This new risk premium is already reshaping the way the global economy functions. Airlines have become more cautious in their operational planning because of higher fuel costs. Large manufacturers are postponing expansion and delaying investment decisions. Central banks have become less willing to cut interest rates, fearing that higher energy prices may trigger another wave of inflation. Even financial markets no longer react only to company performance or economic data. They have become highly sensitive to any political statement or military development in the Gulf.

 

The economic cost accumulated over nearly fifty days has become both immense and unprecedented. More than 500 million barrels of oil and condensates are estimated to have been removed from the market, with a value exceeding 50 billion dollars. During certain periods, oil prices rose by more than 30 per cent. Marine insurance premiums for vessels crossing the Gulf increased by between 200 and 400 per cent, while shipping costs on some routes rose by as much as 40 per cent.

 

Yet the true cost lies not only in higher prices, but in the slowdown of global economic growth itself. Every additional dollar added to the price of oil increases the cost of production, transport, and food. As a result, both consumption and investment weaken.

 

This is why major international institutions have begun warning that the world may be entering a period of stagflation: weak growth combined with rising prices. This is among the most difficult scenarios for governments to confront because it leaves them with very limited policy options. If they raise interest rates to control inflation, economic growth slows further. If they lower rates to support growth, inflation accelerates.

 

The current crisis has also exposed the vulnerability of Arab economies, although in different ways. Oil-producing countries usually benefit from higher prices, but this time they face a larger problem: the difficulty of exporting. Iraq, Kuwait, and Qatar depend almost entirely on the Strait of Hormuz. Consequently, higher oil prices do not compensate for the loss of their ability to sell oil and gas.

 

Saudi Arabia and the United Arab Emirates are in a relatively stronger position because they possess alternative pipelines and ports on the Red Sea and the Gulf of Oman. However, even these alternatives cannot handle all export volumes, which means that the risk remains.

 

Energy-importing Arab countries such as Jordan, Egypt, Lebanon, and Tunisia face a different kind of pressure. In Jordan, for example, every 10-dollar increase in the price of a barrel of oil adds tens of millions of dinars to the country’s annual energy bill, while also increasing the costs of transport, electricity, and industrial production. In Egypt, every additional dollar in oil prices adds hundreds of millions of pounds to the burden of energy subsidies and the state budget.

 

These countries are therefore under pressure from both sides. Their energy bills are rising, while the prices of food, transport, and electricity are increasing at the same time. In the months ahead, they will have little choice but to expand strategic reserves, accelerate renewable energy projects, and diversify their sources of imports in order to avoid becoming vulnerable to future crises.