Key Exporters and the LNG Factor
Major oil-producing nations rely heavily on the Strait of Hormuz for exports. Saudi Arabia, the largest user, shipped 7.5 million barrels per day through the waterway in 2023, according to EIA figures. Iraq followed with 3.4 million barrels per day, the United Arab Emirates with 2.5 million, and Kuwait with 2.1 million. These four countries together account for the vast majority of crude oil flowing out of the Persian Gulf. In addition to crude, Qatar also sends liquefied natural gas through the strait, with those shipments representing about 30% of the global LNG trade. For nations such as Iraq, Kuwait, Bahrain, Qatar, and the United Arab Emirates, the strait is the sole maritime exit to open oceans, making its uninterrupted operation essential for their export-dependent economies.
The legal framework governing the strait is based on the 1975 Algiers Agreement, which defined maritime boundaries and placed the waterway under the joint control of Iran and Oman. That agreement remains the governing mechanism for managing navigation and territorial claims. Tensions have periodically threatened this arrangement. In 2018, Iran threatened to close the strait in response to U.S. sanctions imposed over its nuclear program, but it did not follow through on that threat, according to available records. Over the decades, while various Middle Eastern conflicts have erupted, the waterway has generally remained open for extended periods, though Iran has occasionally prepared to use mines or made other closure threats.
Geopolitical Tensions and Economic Consequences
The consequences of any disruption to the Strait of Hormuz would be profound. If the strait were closed, tankers carrying crude oil and LNG would have to be rerouted around the Cape of Good Hope at the southern tip of Africa. That alternative adds approximately 6,000 nautical miles and 15 days to each voyage, dramatically increasing transit times and shipping costs. For energy consumers in Asia, Europe, and the Americas, such a disruption could lead to severe supply shortages, price spikes, and economic destabilization. The dependence of multiple nations on this single chokepoint amplifies the risk: a closure would affect not only the exporters but also the importers who rely on Persian Gulf supplies to meet a significant portion of their daily consumption.
The EIA data underscores that the Strait of Hormuz holds an outsized and essentially irreplaceable role in the global energy system. While alternative export routes, such as overland pipelines or additional terminals outside the Persian Gulf, exist, none can handle the volume that currently passes through the strait. For the United States and its allies, maintaining the free flow of energy through this waterway remains a longstanding strategic priority. The 2023 transit figures, combined with the peak volumes recorded in 2016, illustrate that even modest declines in throughput can have significant market effects. As long as the global energy economy depends on Persian Gulf oil and gas, the Strait of Hormuz will remain a chokepoint without parallel.
