We must reopen the Strait of Hormuz. But here’s how we ensure it never closes again
The closure of the Strait of Hormuz underscores the vulnerability of global energy supplies, given that about 25% of seaborne oil passes through the waterway. The authors argue that long-term stability requires economic cooperation rather than military intervention, proposing a toll-based system managed regionally with Iranian and Gulf state involvement. Such a system could reduce reliance on U.S. military presence while creating financial incentives to maintain open transit.
- ▪Approximately one-quarter of the world’s seaborne oil passes through the Strait of Hormuz, making its closure economically disruptive.
- ▪A proposed toll system modeled on the Montreux Convention could generate around $4.3 billion annually for Iran based on current transit volumes.
- ▪U.S. operational costs for maintaining security in the Persian Gulf are estimated at $10–30 billion per year, with total costs reaching $60–120 billion.
- ▪The authors suggest a regional maritime framework involving Gulf states to manage patrols, intelligence sharing, and transit coordination.
- ▪External powers like the U.S. should shift from being primary enforcers to facilitators in ensuring the strait’s security.
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Open this photo in gallery:Ships and boats in the Strait of Hormuz, Musandam, Oman on Wednesday.Stringer/ReutersShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountMassoud Karshenas is Emeritus Professor of Economics at SOAS at the University of London. Hashem Pesaran is Emeritus Professor of Economics at the University of Southern California and Emeritus Professor of Economics and a fellow at Trinity College at the University of Cambridge. Ron Smith is Emeritus Professor at the Birkbeck Business School at the University of London.The disruption of shipping flows through the Strait of Hormuz has highlighted the structural fragility of the global energy system.
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