The Strait of Hormuz, through which 20% of the world’s oil passes, is critical to global energy and trade. CNN explores how it could be disrupted by regional conflict, how regional players are preparing for the worst, and the potential impact on markets and maritime routes.

The Strait of Hormuz is a crucial maritime corridor, handling about 20% of the world's oil and energy exports, with most shipments destined for major Asian economies. Its strategic importance has made it a flashpoint during periods of regional conflict, with disruptions causing significant fluctuations in global oil prices and impacting the broader economy.

Recent escalations in the region have led to increased shipping costs and prompted companies and Gulf states to consider alternative routes to maintain supply chain stability. While the current risk level has not yet caused widespread disruption, stakeholders are closely monitoring the situation and preparing for potential volatility in global energy and trade markets.

Strait of Hormuz in the spotlight

The Strait of Hormuz is the only maritime route for exporting crude from the oil-rich Persian Gulf to the rest of the world. An area where 20% of the world's oil and energy transit through it daily. That's nearly a quarter of all oil traded at sea. Most of it flows east to major economies like China, India, Japan and South Korea. 70% of the oil and gas exports from the GCC go to the Asia-Pacific region, so it's not just about the volume, it's that it's going to the countries that represent the key engines for our predicted global economic growth. This isn't the first time it's been a flashpoint. From the tanker war in the 80s. Even at their narrowest point, the shipping lanes through the Straits are two miles wide. To the 2008 standoffs with the United States warships. To threats of closure in 2011, tensions here regularly rattle oil markets. Last month, during the Israel-Iran escalation, Brent crude jumped above $80 a barrel, a reminder that even the threat of disruption sends global energy prices soaring. We'd expect that the global oil price would rise by as much as 30%. This same model suggests that a regional war in the Middle East would probably cause the global economy to shrink by about 1.7% in the third quarter. With vast reserves, Iran is the ninth largest oil producer globally, firmly positioning itself among the top 10 oil-producing nations. What we saw with the recent round of escalation and then ultimately a very clear intent from the Iranian leadership to try and avoid any further escalation or threat of a direct confrontation between them and the United States. So we understand that as long as those red lines, threats to the leadership of Iran, aren't being crossed, there seems at this point to be a genuine willingness, particularly from the Iranians, from the U.S., to maintain a level of de-escalation and avoid that wider conflict. While the threat sent shockwaves across the energy market. That artery is clogged for whatever reason. It'll have a huge impact on global trade. The shipping sector also felt the heat. MERSK said they were closely monitoring security risks and were ready to take operational action if needed. For container shipping, something like 9 million containers on an average year is also translating the Strait of Hormuz. Costs on a key container shipping trade lane from China into Jebel Ali have risen by 80% over the past seven weeks. So there's always a price to pay when risk elevates. But while the Strait of Hormuz remains a critical chokepoint, some Gulf states aren't waiting for a crisis to adapt. Right now, we haven't seen the elevated risk levels around the Strait of Hormuz and the wider region ripple into other parts of the global container shipping supply chain. But that's why shippers and importers are also looking for those alternatives to goods traveling in via the Strait of Hormuz. That can be Jeddah, Saudi Arabia in the Red Sea, if they go in there with the white carriers, those that still travel in there. But it may also be via Oman or the part of the UAE that touches the Indian Ocean. So that's why you always need to keep your options open and remain flexible, because you need to deal with these obstacles all the time. A strategic hedge, one that highlights how energy giants in the Gulf are bracing for volatility, not just reacting to it.

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