The Strait Of Hormuz And The New Logic Of Energy Security – Analysis
By Scott N. Romaniuk and László Csicsmann
The Route Can Reopen—But Trust Is Harder to Restore
Much of the recent discussion surrounding disruptions in the Strait of Hormuz has focused on a central operational question: when will commercial shipping return to normal conditions?
While the restoration of maritime traffic remains an important consideration, this focus risks overlooking the broader strategic implications of a disruption that has unfolded over many months. The deeper impact was not the interruption of shipping alone, but the lasting shift in how governments, businesses, and markets assess risk around critical global routes. This shift may reshape how governments, businesses, and markets evaluate vulnerability for years to come.
For decades, the prevailing assumption was that the Strait of Hormuz represented a critical but manageable vulnerability. Because of its importance to global energy markets, policymakers and market participants operated on the assumption that any disruption would be temporary and that international mechanisms would quickly restore stability. Recent events have upended that assumption, revealing that control of the waterway is no longer the only measure of disruption. A determined regional actor can generate global economic and strategic consequences without ever fully closing it. They have also highlighted the reality that restoring security in a vital maritime corridor is not a simple process. A waterway may reopen, but commercial confidence may take far longer to return.
The key lesson is simple: a maritime chokepoint is not secure simply because ships can still pass through it. True security also depends on confidence, stability, and the willingness of companies to operate there. Modern energy markets depend on a wider system of trust that includes accurate risk assessments, insurance coverage, stable operating conditions, and confidence among commercial operators. When that trust breaks down, the consequences can continue long after the initial disruption has ended.
The Limits of Maritime Access
The distinction between freedom of navigation and freedom of commerce is increasingly important. A shipping route may remain technically open while still becoming economically constrained if companies, insurers, and investors determine that the risks of operating there have become unacceptable.
The disruption demonstrated the limits of relying on access alone. Even when diplomatic efforts reduce immediate tensions or security arrangements improve, commercial actors may remain cautious. For stakeholders across the maritime and energy sectors, including shipping companies, insurers, and energy traders, the resumption of normal operations depends on clear evidence that stability has been restored.
Table 1. Selected Shipping Costs Associated with the Strait of Hormuz Disruption
| Cost category | Before disruption | During/after disruption | Impact |
| War-risk insurance premium | ~0.1% of hull value | Up to ~2.5% of hull value per 7-day period | Significant increase in voyage costs due to elevated security risks |
| War-risk premium for some tanker transits | — | Up to ~10% of hull value for a single voyage | Demonstrates how risk pricing can surge during periods of uncertainty |
| VLCC insurance costs | ~$110,000–$165,000 | ~$1.1 million | Major increase in operating expenses for large crude carriers |
| Transit fee proposal per VLCC | — | ~$2 million | Illustrates how geopolitical disputes can create additional commercial costs |
| Route diversion costs (Cape route) | — | ~$1–2 million additional fuel and time costs | Shows the economic impact of avoiding vulnerable chokepoints |
Their decisions are shaped by the physical ability of ships to pass through a route, in addition to the financial and operational risks associated with doing so. This distinction carries important implications because restoring access is often easier than restoring confidence. A blocked sea route can reopen, but rebuilding the trust that allows businesses and markets to operate normally can take much longer.
The debate over potential transit fees illustrates how geopolitical pressure can reshape the meaning of ‘open’ access. A route may remain legally navigable while becoming commercially contested, as governments and companies reassess whether continued use is economically and strategically viable. Within the context of evolving U.S.-Iran negotiations, the possibility of Iran imposing a transit fee has raised questions about the future balance between freedom of navigation and state control over critical maritime corridors. While the U.S. has emphasised the importance of toll-free transit, Iran has explored proposals involving a service-based levy, reflecting broader tensions over how international maritime rules are applied in an increasingly contested environment.
A Shift Towards Strategic Redundancy
The broader question is how governments and companies respond after confidence has been shaken. One likely consequence of the disruption is an acceleration of existing efforts to reduce dependence on concentrated supply routes. The vulnerabilities exposed by the Hormuz crisis have encouraged energy producers and importers to reassess their reliance on a single transit corridor, accelerating interest in alternative export routes, expanded storage capacity, diversified supply arrangements, and infrastructure investments aimed at reducing exposure to future disruptions.
This does not mean that the Strait of Hormuz is becoming less important. The waterway will remain a vital artery for the global energy system, and its importance is not disappearing even as countries seek ways to reduce their dependence on it. However, the assumption that uninterrupted access can be taken for granted is changing. Governments and corporations are increasingly treating resilience and redundancy as strategic priorities rather than secondary considerations.
The result may be a gradual transformation in how energy security is understood. Instead of focusing primarily on maintaining access to existing routes, policymakers are placing greater emphasis on creating systems capable of absorbing disruption when access is threatened. However, there is still no simple or immediate solution for the challenges that arise when a waterway as critical as the Strait of Hormuz is compromised. The difficulty is not only finding alternative routes, but building a system resilient enough to withstand shocks to the global energy network.
Shipping companies may maintain elevated rates in the long term, as energy prices and risk premiums may settle above pre-disruption levels. Moreover, the restoration of oil and gas infrastructure may require significant time, particularly where ports and other critical facilities have sustained damage. These pressures reinforce the broader shift toward strategic redundancy, as governments seek to reduce dependence on vulnerable maritime chokepoints.
Alternative economic corridors may therefore increase in significance. Following the escalation of tensions with Iran, the United Arab Emirates (UAE) have examined the possibility of a 76-kilometre canal, known as the ‘Al Khaleej Shipping Channel’, designed to provide an alternative maritime route around the Strait of Hormuz. The proposed waterway, which could take decades to complete, would connect the Arabian Gulf with the Gulf of Oman and would be approximately 40% the length of the Suez Canal. With an estimated cost of $250 billion–$450 billion USD, the proposal reflects the scale of investment being considered as states seek to reduce exposure to critical maritime vulnerabilities. However, the project also highlights the limits of redundancy: a new waterway could reduce dependence on the Strait of Hormuz while potentially creating a new strategic chokepoint of its own, sometimes described as a possible ‘Suez Canal of the Persian Gulf’.
Similar dynamics apply to Israel’s proposed Ben Gurion Canal project, a $55 billion project aimed at establishing a connection between the Mediterranean Sea and the Red Sea as an alternative to reliance on the Suez Canal. The proposed canal would run between the Gulf of Aqaba (Eilat) and the Mediterranean Sea via the Negev Desert, creating a potential alternative maritime corridor. Estimated at 250–300 kilometres in length and 50 metres in width, the canal would bypass a major global trade route but could still face strategic vulnerabilities, including potential disruption by non-state actors.
Implications for Strategic Competition
The Hormuz disruption was not merely an energy shock; it was a test of global resilience. It showed that geography continues to play a powerful role in global politics and that the disruption of a critical trade route can create consequences far beyond the region where it occurs. When an important maritime corridor is threatened, governments and businesses are forced to confront vulnerabilities that are often overlooked during periods of stability.
The events surrounding the disruption highlighted this reality, as stakeholders moved quickly to assess risks, protect their interests, and search for solutions to a problem that had no immediate or simple answer. For major powers and their allies, the key lesson is that restoring commercial activity does not automatically restore stability. The priority is not only keeping trade routes open, but ensuring that businesses and markets continue to trust that those routes are reliable enough to support global commerce.
The long-term impact of the Strait of Hormuz disruption may therefore be measured less by how quickly shipping resumes and more by how governments and markets respond to a renewed awareness of vulnerability. The disruption has reinforced a broader reality of the modern global economy: the routes that keep global trade moving are also among the places where global systems are most vulnerable.
About the authors:
- Scott N. Romaniuk—Senior Research Fellow, Centre for Contemporary Asia Studies, Corvinus Institute for Advanced Studies (CIAS); Department of International Relations, Institute of Global Studies, Corvinus University of Budapest, Hungary.
- László Csicsmann—Full Professor and Head, Centre for Contemporary Asia Studies, Corvinus Institute for Advanced Studies (CIAS); Senior Research Fellow, Hungarian Institute of International Affairs (HIIA), Corvinus University of Budapest, Hungary.
