Why Iran’s Strait of Hormuz matters to Asia

Iran’s potential closure of the Strait of Hormuz could severely impact Asian economies heavily dependent on Middle Eastern energy supplies, following escalating tensions after U.S. military action against Iranian nuclear sites.

The strait of Hormuz, spanning 33 kilometers (20.5 miles) between the Persian Gulf and Gulf of Oman, handles approximately one-fifth of global energy flows. While Iran has issued closure threats previously, it never fully shut the waterway. Following U.S. military operations targeting Iranian nuclear infrastructure over the weekend, Tehran’s parliament backed a closure proposal, pending approval from the Supreme National Security Council.

Secretary of State Marco Rubio appealed to Beijing on Sunday to dissuade Tehran from the action, describing it as potential “economic suicide” requiring American retaliation. Energy markets responded with Brent crude reaching $81.40 per barrel Monday before declining, prompting President Trump to warn on Truth Social, “EVERYONE, KEEP OIL PRICES DOWN. I’M WATCHING!”

Regional economies show heavy dependence on the waterway, with 84% of transiting crude destined for Asian markets. China faces the greatest risk, drawing 5.4 million daily barrels through the strait while acquiring over 90% of Iranian crude exports. India processes 2.1 million barrels daily from the route, although Energy Minister Hardeep Singh Puri noted that a “large volume” of the country’s supplies no longer pass through it after recent diversification initiatives. South Korea sources 68% of crude requirements (1.7 million daily barrels) via the waterway, while Japan secures 1.6 million barrels daily, representing 95% of its Middle Eastern crude purchases.

Additional Southeast Asian countries maintain significant exposure to potential disruptions, with Malaysia, Pakistan, the Philippines, Singapore, Taiwan, Thailand and Vietnam all securing considerable supply volumes via the passage. Overall, Asia obtains more than four-fifths of natural gas shipments and three-fifths of refined fuel products moving through the strait.

Economic analysts warn that disruption of the waterway could elevate crude prices beyond $100 per barrel. Rising energy costs also threaten to draw more uncertainties to inflation in Asia, potentially compelling monetary authorities to suspend interest rate reductions or implement increases.

However, some observers believe China might welcome the crisis, considering that it is better equipped to handle the fallout than the U.S. and Europe. Energy specialist Vandana Hari, who considers Iran’s strait closure a “remote tail risk,” says the nation has “little to gain and too much to lose” from antagonizing key oil customer China.