JOSEF KEFAS SHEEHAMA
It’s uncertain if Iran will attempt to close the Strait of Hormuz, which ship 20-25% of the global oil. The closure of the Strait of Hormuz would have an immediate impact on global oil prices, potentially leading to significant global economic crises.
According to energy experts, the Strait of Hormuz, a narrow waterway that connects the Persian Gulf to the Gulf of Oman and the Arabian Sea, is critical for global oil trade and security. Its strategic importance arises from its role as the key conduit for oil and gas exports from major Middle Eastern exporters to worldwide markets. As geopolitical tensions in the region worsen, the possibility of interruption in this critical maritime corridor has become a major concern for the global economy and energy markets. According to the literature, this unique artery ship around 20% to 25% of total global oil consumption, or 20 million barrels per day. A significant amount of crude oil from major oil-exporting countries, such as Saudi Arabia, Iraq, the United Arab Emirates (UAE), Kuwait, Iran, and Qatar. Iran forms the strait’s northern boundary, while Oman and the United Arab Emirates (UAE) form its southern boundary. Its special status as the critical sea route out of the Persian Gulf makes it essential for the Gulf’s energy-rich countries to access international markets. The Middle East is a true energy chokepoint, where geopolitical stability or instability can have an impact on international markets, because there aren’t enough alternate routes to accommodate the volume of exports that flow through Hormuz, in contrast to other major oil-producing regions.
The U.S. Energy Information Administration (EIA) reports that in 2024, these countries accounted for 69% of all Hormuz crude oil and condensate flows, with 84% of crude oil and 83% of Liquefied Natural Gas (LNG) shipping through the Strait of Hormuz going. For these markets, any disruptions in supply within the Hormuz Strait will have a long-term effect. The Strait is essential for the transportation of crude oil, but it is also vital for the transportation of LNG. Qatar, one of the biggest LNG exporters in the world, depends almost entirely on this waterway to supply its gas to international markets, demonstrating the Strait’s significance for the diversification of global energy delivery as well as for the delivery of crude oil.
Furthermore, even a temporary blockage of the Strait of Hormuz might result in sharp increases in oil prices and substantial supply disruptions. Analysts believe that such an event may drive oil prices well over $100 per barrel, with some extreme scenarios predicting prices of $150 to $200 per barrel. As the globe grapples with energy security issues and the shift to greener energy sources, the Strait of Hormuz is likely to remain a focus of international attention. Ensuring the free flow of energy resources via this crucial waterway requires continual political efforts, strategic planning, and international cooperation. The Strait of Hormuz’s stability is more than simply a regional problem; it is a worldwide imperative required to ensure energy security and economic stability in an increasingly linked globe. As a result, if this situation worsens, it has the potential to severely harm the world economy, mostly through increasing energy prices.
In the end, higher operating and energy costs would have an impact on company profitability, possibly resulting in job losses and a precipitous drop in direct investment. This would reduce consumer spending in addition to increasing inflation, starting a never-ending cycle of economic decline. The world’s stock markets would completely collapse as a result of the extreme volatility due to general increase in risk aversion, particularly in countries that import oil. As trade balances deteriorate and inflation increases, the currencies of countries that import energy will sharply depreciate. Significant geopolitical and security ramifications would also arise from the possible closure or disruption of the Strait, in addition to these dire economic effects. Its closure, motivated by Iran’s strategic intentions in reaction to growing domestic and regional tensions, would cause a devastating economic shockwave and fundamentally change the geopolitical and security landscape of the world. The global community depends on this crucial route, therefore any interruption necessitates a prompt, coordinated strategic response to avoid unheard-of repercussions.
In the context of Africa, Namibia includes
Africa may not be as affected by the impending closure of the Strait of Hormuz as major energy consumers like China, India, Japan, and Europe, but these countries are our international partners, so Africa is not exempt from these monumental decisions. African markets would be negatively impacted by price increases due to their heavy reliance on gasoline imports, in addition to the rise in transportation expenses. For African economies, imports of mineral fuels accounted for 13% ($87 billion) of overall import value in 2024. Oil producers such as Nigeria that have poor refining capabilities continue to rely significantly on imported fuel. The mining industry in mining economies (such Zambia, South Africa, Botswana, Namibia, and Ghana) is likewise highly dependent on fuel imports as an input, and the mining industry is negatively impacted by rising energy prices. Prices for gasoline, diesel, gas, and other related goods will rise in the near future in economies all around the world, including Namibia. Many countries and businesses would be significantly impacted by this, and there may be an increased danger of inflation and currency rate depreciation.
Moreover, the war highlights how important it is to diversify energy supplies and lessen dependency on the unstable international oil markets. Such strategic economic resilience would safeguard both sectors and consumers by reducing the effects of geopolitical shocks. Even while the Israel-Iran war poses immediate difficulties, particularly in the form of possible rising oil prices, African countries’ conservative monetary policies allow for measured responses. Prudent fiscal management, cautious heed to detail, and measures that promote energy resiliency and economic diversity are all supported by conservative economic principles. Given the complexity and unpredictability of the global environment, it is imperative that external shocks do not derail Africa’s economic transformation effort. If properly utilized, Africa’s core advantages can aid in surviving this crisis. To protect the country’s economic stability and opportunities for future growth, it will be crucial to maintain prudent fiscal and monetary policies in addition to implementing significant economic reforms.
In conclusion, in order to reduce the human cost of conflict, avoid economic fragmentation, and maintain the stability of international trade in a world that is becoming more unpredictable, the international community must cooperate to prevent Israel and Iran from escalating their tensions further.
