The Long Shadow of the Iran Shock: Hormuz and the New Geography of Energy Power

Foreign Affairs | Jason Bordoff and Meghan L. O’Sullivan

In February 2026, Tehran’s closure of the Strait of Hormuz blocked twenty million barrels per day of oil and liquefied natural gas flows, causing the largest supply disruption in global history. Despite widespread fears of $200 crude, Brent prices peaked at $126 and averaged $100 due to market oversupply and extensive infrastructure cushions.

This operational buffer relied heavily on Saudi Arabia and the United Arab Emirates expanding bypass pipeline flows by five million barrels per day, alongside record International Energy Agency emergency stock releases. China further stabilized global crude supplies by cutting imports by five million barrels per day, though East Asia suffered severe refined fuel shortages. Meanwhile, historic domestic production insulated the United States from economic contraction, contrasting sharply with European fiscal strain and depleted natural gas reserves. With global strategic inventories now threadbare, a second phase of Persian Gulf disruptions threatens far more destructive price shocks worldwide.

Comment

The strategic utility of the Habshan-Fujairah pipeline and Saudi Arabia’s Petroline demonstrates that sovereign bypass infrastructure functions as an economic counter-deterrent during maritime chokepoint blockades. By routing crude directly to Gulf of Oman and Red Sea terminals, these overland assets systematically undercut Tehran's capacity to convert tactical control over the Strait of Hormuz into systemic economic leverage. This shift alters the defence economics of Persian Gulf conflict, transferring the immediate fiscal burden of maritime closure onto regional net importers while preserving revenue flows for pipeline-equipped states.

Downstream, this disparity recalibrates how coercive statecraft operates during extended naval confrontations in the Arabian Sea. States possessing independent export bypasses can absorb the cost of prolonged maritime interdiction operations without suffering catastrophic domestic revenue collapse. Consequently, the Habshan-Fujairah pipeline and Petroline effectively raise the economic threshold required for naval blockades to force diplomatic concessions from Arabian Peninsula producers.

Strategic Question for Discussion

If sovereign bypass routes like the Habshan-Fujairah pipeline and Petroline absorb primary crude volumes during a blockade, which factor determines whether interdiction remains an effective coercive strategy: targeting downstream refining bottlenecks or expanding kinetic strikes against pipeline pump stations?

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