Summary and Key Points: Iran has turned the world’s busiest oil route into a tollbooth — forcing ships through Hormuz to pay its government, and calling it the new normal. The fallout reaches beyond oil: the strait carries about a third of the world’s seaborne crude and a third of its fertilizer, so the squeeze hits fuel and food prices alike. But Iran may have overplayed its hand — while it blackmails the world, its own economy is collapsing, and pressure is building for more military action.
What Happens When Iran Refuses To Give Up The Strait of Hormuz?
Iran’s missile capabilities. Image Credit: Creative Commons.
The Islamic Republic of Iran has continued to demand that any ship passing through the narrow Strait of Hormuz must pay the Iranian government a toll.
The ISW reported that “ Iran continues to try to frame the Islamic Revolutionary Guards Corps (IRGC) ‘management’ of transit through the Strait of Hormuz as the new status quo.”
The strait is a vital choke point for roughly 20 percent of global oil and liquefied natural gas. Blocking it caused immediate spikes in global fuel prices, with certain crude grades soaring well over $100 a barrel.
Under international law, nations must permit the peaceful passage of the strait. By refusing to give it up, Iran has sought to establish state agencies that compel commercial ships to navigate designated northern vetting lanes near the Iranian coast, requiring them to pay fees and tax their cargo.
When Iran refuses to allow passage through the Strait of Hormuz, it triggers an international crisis featuring cascading global shortages, blockades, and the threat of renewed military escalation.
Iran Army Tank. Image Credit: Creative Commons.
The Chokepoint And The Blockades
About 13 million barrels per day of crude oil transited the Strait of Hormuz in 2025, accounting for roughly 31 percent of global seaborne crude flows, according to data from market intelligence firm Kpler, and reported by CNBC.
Besides oil and gas, the blockage restricts roughly one-third of the world’s seaborne fertilizer—crucial to global agricultural production—raising concerns about food insecurity.
Iran’s Navy and Islamic Revolutionary Guard Corps (IRGC) have utilized small fast-attack craft, submarines, and anti-ship missiles in attempts to close the Strait. However, the most effective method has been to lay sea mines, making the route too dangerous for commercial oil tanker traffic.
The IRGC has regularly harassed ships and forced them into Iranian-controlled territorial waters, as first reported back in June 2025. And have launched attacks on foreign warships and commercial vessels.
Because of this, the US has imposed blockades on Iranian ports, issued sanctions against ships that comply with Iranian regulations, and escorted tankers through the Strait.
Iranian small fast-attack boats that have attempted to lay mines have been sunk.
Iranian Blackmail Threats Over The Strait
Iran is threatening to assert control over the Strait and thereby force European and Gulf countries to acquiesce and force the United States to recognize their control over the Strait.
Tehran is trying to use blackmail over the Strait to circumvent the crippling international economic sanctions. This is a Freedom of Navigation issue that affects global commerce.
The UN Convention on the Law of the Sea (UNCLOS). Under UNCLOS, the Strait of Hormuz is considered an international strait. This grants all ships, including warships, the right of rapid and uninterrupted “transit passage” that coastal states cannot suspend or impede.
What Comes Next In The Strait?
While Iran has been using rail lines to ship oil to China via Pakistan and through the Caspian Sea, those lines of shipping are not as efficient as the sea routes through the Strait and would be targets for interdiction if and when the air campaign is restarted.
Most analysts believe that only 40 percent of Iran’s trade could be rerouted away from the blockaded ports. While that will allow them to prolong the shortages of food and goods for a short while, it is far below what is needed, and the economic crisis will continue to spiral.
While many analysts vastly overrate the regime’s ability to withstand the blockade, the economic indicators tell otherwise. Inflation in April was running at a soaring 67 percent, as millions of Iranians have lost jobs.
Alternative Pipelines Bypassing The Strait
The United Arab Emirates (UAE) has accelerated plans for a second pipeline bypassing the strait, which it hopes to put into service in 2027.
This sends a strong signal that Abu Dhabi believes the US economy is currently booming, with the Dow, the waterway could remain imperiled far longer than many others believe. Because Iran could threaten closure again in the future.
The Saudis also have a pipeline, but it can’t handle the volume of oil that passes through the Strait daily. However, these pipelines (and others) have already been attacked by Iran.
While the US economy is currently booming, with the Dow over 50,000, the Iranian economy is in freefall. Unemployment rates are skyrocketing, the currency is in freefall, and food inflation is rampant.
Iran is being forced to curtail oil production, with its markets severely curtailed. This will result in many of those being closed forever.
But the situation is not bad enough to force the mullahs’ and the IRGC’s hands… yet. But something will have to change. And that may entail more military action against the IRGC.
About the Author: Steve Balestrieri
Steve Balestrieri is a National Security Columnist. He served as a US Army Special Forces NCO and Warrant Officer. In addition to writing on defense, he covers the NFL for PatsFans.com and is a member of the Pro Football Writers of America (PFWA). His work was regularly featured in many military publications.
