Before the war began on 28 February, the Strait of Hormuz carried roughly a fifth of the world’s oil and liquefied natural gas. It has been the central pressure point of the conflict ever since, and the question now being asked in the analysis is whether it still works as leverage.
The numbers underneath the question are strange and instructive. Windward recorded 55 transits in the week of 16 to 23 September, about 94 per cent below pre-war traffic of roughly 910 a week. Over the same period, export volumes from major Middle Eastern producers were reported back near pre-war levels, rebounding in September to about 12.8 million barrels a day according to preliminary Kpler data, with shipments through the strait expected to reach around 7.4 million barrels a day.
Far fewer ships. Roughly the same oil.
That gap is the whole story. Fewer, larger, better-escorted vessels making fewer trips can move most of the volume. Insurance repriced. Convoys formed. Routes and loading patterns adjusted. CENTCOM has been publicly disputing Iranian claims of control over the waterway, pointing to the thousands of ships that have passed through and to more than a billion barrels of crude transiting the region in recent months. Iran’s Revolutionary Guard says it exercises full control through its naval forces.
Both statements can be true at once, which is precisely what erodes leverage. A chokepoint that is closed absolutely is a weapon. A chokepoint that is expensive, slow and frightening but ultimately passable is a tax, and markets eventually price a tax and get on with it.
This is the oldest problem with any kind of exclusive position, and it applies to businesses that will never see a tanker.
The supplier who is the only source of a key ingredient has real power, right up to the moment they use it hard enough that every customer starts looking for a second source. The landlord with the only good site on the street has leverage until the rent is high enough to make the worse site across the road worth refitting. The employee who is the only person who understands the booking system is indispensable until the week they are indispensable at exactly the wrong moment, after which somebody writes documentation.
Leverage is an asset that depletes when spent. It is at its maximum the day before it is used, and every day of use teaches the other side something about how to live without you.
The political pressure is running the other way as well. The war has driven a large increase in American pump prices, with consumer inflation posting its strongest annual rise in years, ahead of November elections. NATO allies have declined to send ships to open the strait without a full peace deal and an internationally mandated mission. Washington has offered to loan energy companies up to 40 million barrels from the Strategic Petroleum Reserve.
Iran’s negotiating position still rests on reopening the strait as the thing it has to give.
The longer that offer sits on the table, the less there is to buy.
Source: Al Jazeera, “Is Iran losing its leverage over the Strait of Hormuz?”
