Commentary: The Iran war is now all about the future of Hormuz

HORMUZ IS KEY

Once institutionalised, running Hormuz would allow the Iranians to turn it into a cash machine, tolling not just the ships that carry the 25 per cent of the world’s seaborne oil and 20 per cent of its liquefied natural gas (LNG) trade, but also the many other products that the Gulf states export via the strait. 

Germany’s Kiel Institute recently listed the top 50 products other than crude oil and LNG that passed through Hormuz in 2024, finding that they accounted for a cumulative US$773 billion in value and an average 14.9 per cent of total global exports for each product category.

Before the war, the Iranian regime was bankrupt, out of ideas on how to fix the economy and under pressure from a furious population it could control only by jailing or killing them. Hormuz represents a potential route to its longer-term survival. That is not the kind of regime change Trump was hoping for. It’s also a potential precedent for other chokepoints, including the Red Sea or the Strait of Malacca.

Tehran has discovered in Hormuz a geopolitical tool and deterrent far more powerful than its network of proxies, and more exploitable than owning a nuclear arsenal. The ability to choose which ships to let through and which to block, overcharge or detain for alleged safety violations would give Tehran enormous leverage and, in the process, upend a key pillar of the American century: the freedom of navigation that the US Navy guaranteed for its own economic benefit and that of its trading partners.

This is why Tehran’s Majlis, or parliament, is rushing through wartime legislation to write a unilaterally claimed sovereignty over the strait into Iranian law. So transformative would this change be that the issue almost guarantees the conflict’s escalation until it gets resolved. 

That can come through force, as Trump again threatened on Thursday, or through the kinds of negotiated tradeoffs that Trump would be loathe to make, because they’d look so very much like defeat.