Hormuz Chokepoint Exemplifies a Vulnerable Global and Regional Energy Delivery System as Well as a Sanctions Evasion System

     The Strait of Hormuz, formed from the geological processes that shaped the gigantic South Pars Natural Gas Field (see paywalled Scientific American article), has given us an example of both a global and regional delivery system for hydrocarbons and related products. It has also been acknowledged for half a century that Iran could develop leverage over it. Indeed, they have been fortifying it heavily with a military presence. Closing the Strait, which is considered to be international waters under international laws, is, of course, a breach of international law. Hitting commercial shipping with military force is a war crime.

     As I write, Iran is reportedly charging ships as much as $2million to go through in what has been termed a toll booth and compared to a mafia shakedown. This is also highly illegal in international waters, although it allows the ships to pass through its territorial waters while keeping the international waters and those of the territories of the Gulf States across the Strait under threat of attack. This won’t be tolerated for long, I suspect. As of yesterday – March 23 – about 20 ships have gone this route. This new revenue stream combined with the U.S. temporarily un-sanctioning some Iranian oil is also a boon but is only a one-month reprieve to ease markets. Iran is also reportedly requiring payment in Chinese yuan with some ships already enroute to China and India. An article by Max Meizlish in the Washington Examiner recommends disrupting this pay for transport scheme by targeting  Larak Island, which the Islamic Revolutionary Guard Corps is reportedly using to monitor vessels transiting the “safe” route. Then they should track down the finances of the Chinese and Indian sanctions-evading ships for enforcement actions.

“Washington should aggressively sanction Chinese businesses and financial institutions that have historically facilitated Iranian sanctions evasion — and that are well positioned to process any yuan-denominated payments linked to the corridor’s operation. These firms and the schemes they operate have been detailed at length by the press and research institutions.”

“The Treasury Department should impose sanctions on the Chinese financial intermediaries most likely servicing Iran’s accounts, sending a clear signal that there are consequences for helping to solidify the regime’s control over the strait. The Trump administration has thus far shown little appetite for such coercive action directed at Beijing. Iran’s effective closure of the Strait of Hormuz may shift that strategic thinking.”

     Of course, doing this might be seen as counter to stabilizing the market and Trump’s recent actions to allow India to buy sanctioned Russian oil and now India, China, and others to buy Iranian sanctioned oil at premium prices. In any case, allowing Iran to control who goes through and who doesn’t won’t be and should be tolerated for long.  

     Meiklish continues:

“Washington should also consider broader coercive options. Richard Haass has proposed an “Open for All or Closed to All” policy, which would establish a defensive line across the Gulf of Oman to prevent Iranian vessels from reaching their final destinations until Tehran unconditionally reopens the strait. The approach would force the countries buying Iranian oil — China, India, Pakistan, and Turkey — to pressure Iran directly. It is worth serious consideration.”

“Iran’s “safe” corridor is a protection racket. The U.S. has the military assets, sanctions authorities, and diplomatic leverage to shut it down. What it needs is the will to act before Iran’s control over the strait becomes the status quo.”

     Meanwhile, due to the effective embargo, things have changed on the ground in several Asian countries due to the sudden unavailability of crude oil and refined fuels. About 90% of the fuels that pass through the Strait are sold to Asian countries. A national emergency has been declared in the Philippines due to high fuel costs. China has limited a plan fuel price hike. Other countries are implementing emergency energy conservation measures. Shorter work weeks and work-at-home plans have been implemented. India’s ceramic industry can’t buy or afford natural gas so much of it has shut down. There is also a widespread shortage of LP Gas, which has become an important fuel in India and other Asian countries, and a cleaner replacement for wood, charcoal, and dung for cooking fuel. Hotels and schools have also been shut down or working on limited hours.

     When prices skyrocket, people are affected. The difference between profit and loss becomes smaller, and lives are upended. Perhaps Trump should have considered that before going ahead with the war, although I understand the goal of hitting the sinister regime, which has been a growing threat in the region and the world.  

     Apparently, Europe is also on the verge of fuel shortages. By next week, there will be energy conservation measures enacted in EU countries, according to an article in The Telegraph. However, others have argued that Europe would only be affected if the closure lasts into summer. Along with 20% of the world’s oil, about 20% of the world’s LNG trade passes through the strait. The International Energy Agency has recommended energy conservation measures. Europe is currently competing with Asia for U.S. oil and LNG supplies. As in Asia, high energy prices are a big concern for people.

    

 

References:

 

Everyday life in Asia is being upended by Iran war fuel crisis. Koh Ewe and Flora Drury. BBC. March 24, 2026. Everyday life in Asia is being upended by Iran war fuel crisis

Iran’s shakedown in the strait. Max Meizlish. Washington Examiner. March 24, 2026. Iran’s shakedown in the strait

The reason the Middle East has so much oil is the same reason it’s all stuck there now: A continental collision trapped oil within what is today Iran. The same collision explains why that oil is trapped behind the Strait of Hormuz now. Stephanie Pappas. edited by Andrea Thompson Scientific American. March 6, 2026. A quirk of geology explains Iran's oil—and why it's stuck in the Persian Gulf | Scientific American

Europe facing fuel shortage within days, warns Shell boss. Matt Oliver, Connor Stringer, and Emma Taggart. The Telegraph. March 24, 2026. Europe facing fuel shortage within days, warns Shell boss