Hormuz Will Not Simply Return to the Way It Was

The US-Israel-Iran conflict has entered its second month. Facing a disadvantage in conventional military strength, Iran has adopted an asymmetric warfare strategy: shifting its strategic pivot to the Strait of Hormuz. The logic is not complex—once uncertainty arises in the strait, the pressure first hits Asian countries such as Japan and South Korea, which are highly dependent on Middle Eastern energy and raw materials, then spills over to Europe, and finally circles back to Washington through pressure from allies. This is not a direct confrontation, but a horizontal pressure tactic using the global supply chain as leverage. Simultaneously, the Houthi forces are poised in the Bab el-Mandeb Strait; the two straits echo each other from north to south, forming dual strategic pressure nodes. Iran has not announced a blockade. Its public stance is one of "permit-based, selective passage"—vessels must coordinate in advance and obtain transit permits, with Iran reserving the right to deny entry to ships from hostile nations. The subtlety lies in transforming the clear question of "to blockade or not" into a persistent state of ambiguity over "who can pass and under what conditions." An open blockade would immediately trigger a definitive military response, whereas this ambiguous control may be just as lethal yet far harder to counter. According to data from Clarksons Research as of April 2, 2026, transit volume through the Strait of Hormuz has dropped by approximately 95% compared to pre-conflict levels. The average daily number of passing vessels fell from 125 to 8, with the share of "shadow fleets" soaring from 15% before the war to 60%. This indicates that normal commercial shipping has essentially withdrawn, leaving the passage occupied by gray-zone operations evading sanctions rather than a normal trade order. I. The Failure of the Old Order This situation is not without historical precedent. During the Iran-Iraq War, the two sides attacked more than 400 merchant vessels in the Persian Gulf, about 60% of which were tankers. According to research by the Strauss Center at the University of Texas at Austin, approximately 23% of the attacked tankers were sunk or declared a total loss. However, after the war ended, the passage gradually recovered, and the supply-demand structure largely returned to its original state—while the oil price baseline shifted upward, no structural reshaping of the supply side occurred. The restoration of the old order depended on three conditions being met simultaneously. The most decisive factor was that the United States provided a maritime security order: it launched Operation Earnest Will in 1987 to provide naval escorts for Kuwaiti tankers reflagged as American ships, and in 1988, it severely damaged Iran’s naval forces during Operation Praying Mantis, keeping the impact within manageable limits. It was precisely this military backing that rebuilt the credibility of the Strait of Hormuz as a transit route, convincing the shipping industry that the passage was safe and trade could resume. The other two conditions provided the breathing room for recovery—on the demand side, there were no alternative options, so energy-consuming nations had no choice but to wait for supply to recover. The global supply chain was not yet deeply integrated, so the transmission of disruptions was limited, and systemic risk was far lower than it is today. Today, these three conditions have all changed. At the military backing level, if the U.S. attempts to both suppress Iranian military power and escort merchant ships simultaneously, operating on two fronts would stretch its resources thin. A deeper issue is that after decades of strategic exhaustion and military contraction following the Cold War, the U.S. Navy no longer possesses the overwhelming unilateral power projection capability it had during the Iran-Iraq War—which was the fundamental prerequisite for the escort mechanism to function back then. At the demand substitution level, new energy has reached scale, and consuming nations now have both the motivation and the ability to actively restructure their energy consumption patterns rather than passively waiting. At the supply chain level, under deep global integration, any sustained shock will trigger a systemic reorganization, significantly narrowing the time window for the old order to self-repair. The premises upon which the old restoration mechanism relied no longer exist, meaning that even if the war ends, the situation will not simply return to the way it was—the supply structure itself will be forced to reshape. This is not mere inference; there are already precedents to follow. The trajectory of the Red Sea's navigation recovery since the crisis began in late 2023 is the most direct real-world footnote to this judgment. After Houthi forces attacked merchant ships, a large number of vessels were forced to reroute around the Cape of Good Hope. This was essentially a transportation-side crisis—the goods still existed, but the route became longer and more expensive. Compared to a supply-side shock in Hormuz, the intensity was much lower. Yet, even so, more than two years later, Red Sea shipping has yet to return to normal. According to Clarksons Research data from February 2026, the average daily vessel transit in the Gulf of Aden was still down about 70% from normal 2023 levels. By vessel type, container ship transit decreased by about 86%, LNG carriers by about 95%, and bulk carriers by about 56%. Meanwhile, transit around the Cape of Good Hope increased by approximately 93% compared to 2023, with about 717 container ships and 69 routes still maintaining rerouted status. Although there was a slight rebound in transit volume at the end of 2025, it flattened out again entering 2026, failing to sustain the recovery momentum. Leading liner companies like Maersk have begun tentatively resuming passage for some routes via the Suez Canal, but the overall market remains cautious regarding large-scale resumption. The fundamental reason is that once a passage's credibility is damaged, it is difficult to restore. A ceasefire does not equate to a return to the status quo—even if the goods are there and the route is open, if credibility has collapsed, the traffic will not return. Hormuz faces a deeper issue. The Red Sea crisis shook the route; the Hormuz crisis shakes the source of the goods themselves. Where this crisis will ultimately drive the global supply chain is precisely the key point to observe. II. Various Players in the Reshaping of the New Order The impact of the Strait of Hormuz extends beyond energy. Its transit cargo flows essentially constitute four types of critical supply chains. The first is energy, including crude oil, LNG, LPG, and refined products, which are the fundamental inputs for the global industrial and transportation systems. The second is industrial raw materials, such as naphtha and methanol, which directly support chemical and manufacturing production. The third is agricultural raw materials, including sulfur and synthetic ammonia, which are crucial material foundations for global food production. The fourth is key materials for high-end manufacturing, such as aluminum and helium; a supply disruption would directly affect the normal operations of high-end industries like semiconductors, new energy, and aerospace. The common characteristic of these four chains is that their final destinations are not the commodities themselves but specific industrial sectors—ranging from automotive, textiles, and packaging to food cultivation, semiconductors, new energy batteries, and high-end equipment manufacturing. Therefore, once obstructed, the impact will not stop at oil prices but will transmit deep into industrial chains, ultimately acting upon broad sectors of the real economy. In other words, Hormuz is not a single energy corridor but a critical supply node embedded within the global industrial system. However, the intensity of the shock varies across different categories. This difference is essentially determined by three variables. First is the channel exposure, which is the degree of dependence of a commodity on the Hormuz passage. Second is short-term substitutability, which is whether alternative sources can be found, inventories utilized, or process routes switched to hedge against a blockade. Third is downstream penetration, which is how many links in the industrial chain will be affected and how deep the transmission will go once a price shock occurs. The superposition of these three variables determines the actual intensity of the shock. High exposure means the shock will happen. Low substitutability means the shock will be difficult to absorb. High penetration means the shock will rapidly spread downstream. Categories where all three conditions are met will be the risk nodes where pressure is most concentrated in this crisis. In this round of shocks, the energy system has become the most central risk source because it simultaneously exhibits the triple characteristics of "high exposure, low substitutability, and high penetration." The Strait of Hormuz is an irreplaceable bottleneck for global energy trade. Approximately one-quarter of global seaborne oil trade and one-fifth of LNG pass through this channel daily, and the flows are highly concentrated, with over 80% destined for the Asian market. Once the passage is obstructed, the impact will not be dispersed but will be released in a concentrated manner into the same demand region. From a historical comparison, the scale of this supply disruption has significantly exceeded existing empirical frameworks. Over the past seventy years, every major energy crisis was accompanied by some amount of spare capacity acting as a buffer—when the 1956 Suez Crisis disrupted about 10% of supply, spare capacity was about 35%; when the 1973 Arab oil embargo disrupted about 7%, spare capacity was about 8%; when the 1990 Gulf War disrupted about 9%, spare capacity was about 4%. Currently, the shock is approaching 20%, and the global spare capacity that can be mobilized is virtually zero. This is the largest energy supply disruption since World War II and the one with the fewest hedging options. The problem lies not only in the channel being blocked but also in the fact that the gap cannot be filled. Crude oil is not entirely without alternative paths, but all potential alternatives are difficult to form as effective supplements in the short term—most idle capacity is still located within Hormuz, detour pipeline capacity is limited and its safety has been compromised, and strategic reserves can only smooth out the pace but cannot provide a sustained supply. Asian refineries have long designed their processes around Middle Eastern medium-to-heavy crude oil; switching to light alternative oils in the short term also involves friction costs at the technical level. LNG the constraints on LNG are even more rigid. Exports from Qatar and the UAE are physically highly dependent on Hormuz; a blockade implies a direct disruption. Major suppliers such as the U.S., Australia, and Russia are all operating near full capacity, with almost no redundancy in global liquefaction capacity. The damage to Ras Laffan Industrial City in early March further reinforced this constraint—two liquefaction trains and one gas-to-liquid (GTL) unit were shut down, losing about 12.8 million tons per year of capacity, or about 17% of Qatar’s total capacity. Recovering damaged capacity takes 3 to 5 years; even if the conflict eases, returning undamaged units to normal levels takes 3 to 4 months. A ceasefire does not equal restoration, a reality particularly evident in the LNG system. With supply irreplaceable, pressure can only transmit downward. From the perspective of downstream penetration paths, the diffusion of energy shocks covers almost all industrial sectors. Crude oil prices transmit simultaneously through two main lines—logistics costs and raw material costs—making it difficult for transportation and manufacturing sectors to avoid the impact. LNG diffuses along four paths—electricity, fertilizer, industrial fuel, and chemical raw materials—causing deeper cost disruptions to the industrial production system. The combination of both transforms energy prices from fluctuations of a single commodity into a generalized rise in the cost baseline. The shock presents clear stratified characteristics across different economies. The pressure is most concentrated in the core manufacturing economies of East and Southeast Asia, which are facing the dual pressure of supply and price. Japan, South Korea, and Taiwan (China) have direct Hormuz dependence for oil and gas of 21%, 33%, and 27% respectively. Their local energy production is almost zero, they have no room for coal switching, and no pipeline gas alternatives; their comprehensive anti-shock coefficients do not exceed 13%. Thailand (direct dependence 27%, anti-shock 31%) and the Philippines (direct dependence 10%, anti-shock 10%) are in similar positions; supply disruptions will first hit power supplies, then transmit to industrial production and residential life. Singapore, as the world's most important refining and transshipment hub, has a total oil and gas dependence near 100% and a comprehensive anti-shock coefficient of only 1%, making its sensitivity to the shock the most prominent among all economies. For Europe, the impact is primarily seen in price shocks transmitting through cost chains to the industrial and consumer sectors. Greece's direct dependence on Hormuz is as high as 56%, with a comprehensive anti-shock coefficient of only 20%, facing both supply and price pressures. Italy's direct dependence is only 9%, but its total oil and gas dependence is 75%, with an anti-shock coefficient of 18%; manufacturing and residential energy costs will rise in tandem with oil prices. The Netherlands, as an important European energy transshipment hub, has a direct dependence of 14% and total oil and gas dependence of 66%, with an anti-shock coefficient of 26%; the pressure from price transmission is also significant. In contrast, economies with local energy substitution capabilities show significantly stronger resilience to shocks. Mainland China’s direct dependence on Hormuz is only 7%, and the proportion of coal and renewable energy in terminal energy is relatively high, resulting in a comprehensive anti-shock coefficient of 76%, providing a strong buffer on the supply side. India’s direct dependence is 13%, and coal accounts for about 44% of terminal energy; its anti-shock coefficient is 56%, providing some switching space, though the switching speed is limited and electricity supply will still face pressure. The U.S., as a net energy exporter, has a direct dependence on Hormuz near zero, so supply-side shocks are relatively limited, with an anti-shock coefficient of 70%; the primary pressure path is the rise in oil prices pushing up domestic inflation. The core of this crisis lies in Iran turning the Strait of Hormuz into a critical node strangling the global energy supply chain. The shock to the energy market is no longer a temporary price fluctuation but has gradually formed a structural supply tightness. In this context, major Asian manufacturing economies are the first to be affected. Coupled with the long recovery cycle for LNG capacity, weakened maritime security guarantees, and the declining reliability of key shipping lanes, the original energy supply landscape is gradually loosening, and the global industrial system is forced to readjust in an environment of higher costs and greater uncertainty. Risk Warning and Disclaimer Markets carry risks, and investment requires caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are appropriate for their specific circumstances. Investing based on this is at your own risk.