Analysis: Long-term Closure of the Strait of Hormuz Could Trigger Global Economic "Certainty Recession"

**March 3 – Strait of Hormuz in Global Economic Spotlight Amid Iran Tensions** Tensions in Iran and Middle East retaliatory actions have thrust the Strait of Hormuz back into the global economic spotlight. Analysts warn even partial or temporary oil supply disruptions could hit the global economy hard—with a prolonged closure risking a "certain recession." Bob McNally, founder of Rapidan Energy Group and former Bush administration energy advisor, said: *“A prolonged Strait of Hormuz closure would send the global economy into a certain recession.”* U.S. Energy Information Administration (EIA) data shows: - 20% of global liquefied natural gas (LNG) trade will pass through the strait by 2024; - 38% of the world’s oil supply flows through the waterway; - Saudi Arabia alone will ship ~5.5 million barrels of oil per day via the strait in 2024. Alternative pipelines across the Arabian Peninsula have limited capacity, so they can’t offset a full closure. Even without an Iranian blockade, market expectations are rattled: Iran’s military labeled the area “unsafe,” cutting ship traffic by 70% vs. the prior day. Research firms estimate: - A >1-year closure would erase ~15% of global LNG supply, hitting Europe, India, and Japan hardest; - Targeted Gulf energy infrastructure or prolonged restrictions could push oil prices above $100/barrel; - Some institutions put the odds of oil hitting $120 at 20%. Iran faces practical hurdles to a long-term blockade: U.S. military presence in the region and diplomatic backlash from cutting energy supplies. Historically, Iran has threatened to close the strait multiple times but never followed through. Energy consultant Wood Mackenzie notes: - The 1970s oil crisis sparked a global recession, but the world now relies far less on oil; - $200/barrel oil would likely be needed to match past impact levels; - Volatile global financial markets from rising energy prices could push countries to de-escalate.