The Strait That Holds the World

The Strait of Hormuz carries approximately a fifth of the world’s oil supply, significant volumes of liquefied natural gas, and — less visibly but no less critically — the chemical inputs that feed a substantial share of the planet’s agricultural production. It is not merely an important trade route. It is a single point of failure embedded at the heart of the global economy, and the Iran war has reminded us, with uncomfortable clarity, just how exposed we all are.

The word “polycrisis” has gained currency in recent years among economists and strategists who needed a term for something the old vocabulary couldn’t quite capture: not one shock, but several arriving simultaneously, each amplifying the others, overwhelming the systems designed to absorb any one of them individually. A Gulf shutdown would be the polycrisis in its purest form — an energy shock, an industrial shock, and a food security crisis, compounding one another in real time.

Not Only Oil

Begin with oil, the most visible of the three. When prices surged past $100 a barrel in early March, the immediate reaction in many countries was focused on fuel costs — petrol prices, airline tickets, heating bills. These are real and serious concerns. But they are, in a sense, the surface of the problem. Beneath them lies a more structural question: which economies can absorb a sustained supply disruption, and which cannot?

The answers are not uniformly grim. The United States, having achieved something close to energy independence through its shale revolution, is far better positioned than it was during the 1973 oil embargo. Canada, Norway, and Russia — for different reasons and with different geopolitical implications — are similarly insulated from supply shock, though not from global price effects. These nations hold a significant advantage: the crisis, for them, is primarily a matter of cost. For others, it is a matter of access.

Japan sits at the extreme vulnerable end of this spectrum. It is the world’s most Gulf-dependent major oil importer, one of the largest LNG importers with no pipeline alternative to fall back on, and a significant importer of Gulf-sourced fertilizer for its agricultural sector. A full and sustained closure of the Strait of Hormuz would constitute, for Japan, an existential economic emergency — requiring emergency rationing, accelerated nuclear restarts, and substantial international assistance. The country’s strategic planners have long understood Gulf security as a core national interest. The current crisis is the scenario their contingency plans were written for.

India’s situation is different in character but arguably more alarming in its potential consequences. The exposure on oil and fertilizer is critical; the LNG exposure significant. But what makes India’s position uniquely dangerous is not the percentage of imports at risk — it is the scale of the population behind those percentages. With 1.4 billion people, a fuel subsidy architecture that creates enormous fiscal pressure under normal conditions, and limited strategic reserves, a simultaneous oil and fertilizer shock would trigger a cascade: fuel inflation, agricultural input collapse, food price spikes, and foreign exchange depletion, arriving together and reinforcing one another. The political instability that could follow would not be contained within India’s borders.

LNG and Fertilizer

This brings us to the second and third elements of the polycrisis — LNG and fertilizer — which receive far less attention than oil but are no less consequential.

The global LNG market is structurally less flexible than oil markets. LNG requires specialized infrastructure at both ends of the supply chain: liquefaction terminals, specialized tankers, regasification facilities. Rerouting supply around a Gulf closure is not simply a matter of redirecting ships. It requires infrastructure that does not exist in sufficient quantity and cannot be built quickly. South Korea and Taiwan — whose semiconductor fabrication and industrial production are globally systemically important — face extreme exposure on both oil and LNG. A disruption to their energy supply would not merely damage their own economies; it would cascade through global manufacturing and technology supply chains in ways that would be felt on every continent.

The fertilizer dimension is the least discussed and perhaps the most insidious. Urea, the dominant nitrogen fertilizer in global agriculture, is produced in large quantities in Gulf states and exported across Asia. Japan, India, and several Southeast Asian nations depend on it for rice and vegetable cultivation. Fertilizer supply shocks do not translate immediately into food shortages — they operate on agricultural cycles, meaning the consequences of a spring disruption might not fully manifest until autumn harvests. But when they manifest, they manifest at scale, and for populations already under economic stress, the combination of fuel inflation and food insecurity is politically destabilizing in ways that are difficult to overstate.

Current Crisis

Historical precedent offers limited comfort. The 1973 oil embargo removed roughly four million barrels per day from global markets and produced a fourfold increase in oil prices, contributing to severe recessions across the industrialized world. The disruption being contemplated now would be five times larger in volume. The strategic petroleum reserves maintained by IEA member nations — totaling somewhere between 1.2 and 1.5 billion barrels — could theoretically buffer several months of lost supply if released in a fully coordinated fashion. In practice, a release at the required scale has never been attempted, and the logistical and political challenges of executing it are formidable. Strategic gas and fertilizer reserves are considerably more limited and would be exhausted far sooner.

What the current crisis exposes, more fundamentally than any gap in reserve capacity, is the structural fragility that decades of economic optimization have quietly constructed. The logic of globalization — concentrate production where it is cheapest, ship the output to where it is needed — is impeccably rational in stable conditions. It has delivered lower prices, higher living standards, and remarkable efficiency gains. But it has done so by creating a system with very little redundancy: one that performs beautifully when everything works, and catastrophically when it doesn’t.

The Strait of Hormuz is only 33 kilometers wide. That a channel so narrow could hold so much of the world’s economic architecture in tension is not an accident of geography. It is the accumulated consequence of choices — made over seven decades, by governments, corporations, and markets — to optimize for cost and ignore fragility. The Iran war did not create this vulnerability. It merely illuminated it.