Every time the phrase “Strait of Hormuz” appears in the news cycle, the global commentariat enters a familiar ritual. Television panels erupt. Analysts begin speaking in increasingly dramatic tones. Social media fills with predictions of economic apocalypse.
The narrative is always the same: if Hormuz closes, the world runs out of oil and civilization begins to wobble.
The reality is a good deal less theatrical.
Yes, the Strait of Hormuz is an important chokepoint. Roughly a fifth of the world’s seaborne oil passes through that narrow stretch of water every day. And yes, any disruption there immediately injects a geopolitical risk premium into the market.
But the assumption that Iran can simply close the strait for an extended period is a bit of a fantasy.
Iran’s naval surface fleet is hardly the stuff of maritime legend. Most of its floating stock has been destroyed by now.
Then there is the popular image of the great mine-laying operation.
In theory, scattering naval mines across a narrow shipping lane could disrupt tanker traffic. In practice, laying mines in the middle of one of the most closely monitored maritime corridors on the planet—while the world’s most capable navy is actively looking for you—is not merely difficult.
It is nearly impossible to do for long.
That leaves the more plausible threat: missiles, drones, or other projectiles fired from the Iranian coastline toward passing vessels. Those attacks can certainly create danger and temporarily scare insurers, ship operators, and crews.
But even that threat erodes over time as defensive measures increase and launch sites become targets themselves.
So let us assume, for the sake of argument, that Hormuz remains severely disrupted for ten days.
What happens?
Prices rise.
That is the immediate reaction of any commodity market confronted with uncertainty. Traders price in risk long before the physical supply actually disappears. Tanker insurance jumps. Freight costs spike. Futures contracts begin dancing nervously.
But look closely at what we are seeing so far.
Even in the middle of this geopolitical drama, oil prices are hovering around the low one-hundreds. Brent crude recently closed a little above $103 per barrel. Analysts suggest that even if disruptions last several weeks, prices might approach $100–$130 rather than the catastrophic numbers often shouted on television.
That is hardly trivial, but it is also not the end of the world.
In fact, compared with historical shocks, it is surprisingly modest.
Energy markets have endured far more dramatic price spikes in the past—events driven by structural disruptions that lasted months or even years. The Russian invasion of Ukraine, for example, triggered gas price explosions in Europe that dwarfed anything currently being discussed.
And those shocks were far less predictable in duration.
This brings us to a rather uncomfortable observation about the oil market itself.
Given the catalogue of geopolitical problems hanging over global supply, oil prices arguably look astonishingly low.
Consider the list.
Russia remains one of the largest producers on Earth and continues to operate under sanctions and geopolitical uncertainty.
Venezuela—a nation that once pumped enormous volumes—still produces only a fraction of what its geology would allow.
Libya, blessed with abundant resources, has spent years behaving more like a minor supplier than a major one because of chronic political instability.
Add to that the periodic tensions in the Persian Gulf, pipeline disruptions, refinery outages, and the usual parade of geopolitical headaches.
If one looked purely at the supply risk landscape, oil prices north of $200 per barrel would not appear entirely unreasonable.
And yet here we are.
Barely breaking $100.
That discrepancy tells us something important.
It tells us that the supposed pricing power of oil exporters—the legendary ability of producers to squeeze the world economy whenever they choose—is not what it once was. Supply diversity has increased. Demand growth is less explosive than it used to be. Strategic reserves exist. And global inventories remain substantial enough to cushion short-term shocks.
In other words, the market has developed buffers.
Even a severe disruption at Hormuz is unlikely to last indefinitely because it harms nearly everyone involved—including Iran itself, whose own exports rely on maritime routes through the same region.
Which means the market does what markets tend to do.
It panics briefly.
Then it adapts.
Tankers reroute. Strategic reserves are released. Insurance markets reprice risk. Naval escorts appear. Cargo flows reorganize themselves in the slow but relentless manner of global logistics.
Prices may spike for a while, but they rarely remain elevated unless the disruption proves structural rather than temporary.
So the real story here may not be the supposed fragility of the oil market.
It may be the opposite.
Despite wars, sanctions, collapsing petro-states, and the periodic threat of one of the world’s most important shipping chokepoints being disrupted, the price of oil still struggles to remain above the psychological threshold of $100.
That tells us something rather revealing.
The power of oil sellers—the ability to dictate terms to the global economy—is not what it used to be.
And perhaps that is the most important signal hidden beneath all the Hormuz hysteria.