How Strait shutdown could shift Middle East war

The sudden shutdown of commercial traffic through the Strait of Hormuz has handed Gulf oil producers unprecedented leverage in the escalating Middle East conflict, according to analysis by Oilprice.com.

With roughly 15 million barrels per day of crude exports effectively stranded, Gulf Cooperation Council (GCC) nations now have a potent “energy nuclear option”: declaring force majeure across their oil and gas exports and potentially removing another 20% of global supply from the market.

Such a move, Oilprice.com notes, would trigger an immediate global economic shock, compelling the United States and Israel to reassess their military campaign against Iran. Over the weekend, vessel tracking data showed zero commercial crossings through the strait on March 14, down from about 2.6 daily crossings since the outbreak of hostilities and roughly 135 per day before the war. The disruption has prompted emergency diplomatic talks in Europe, with foreign ministers meeting on March 16 to consider naval escorts for tankers attempting to transit the vital waterway.

The economic impact for Gulf producers has already been severe. Estimates indicate that approximately 14.8 million barrels of GCC-produced oil per day are left without a viable export route, costing the bloc up to $1.2 billion daily in lost revenues and over $15 billion since the conflict began. The GCC—comprising Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman, and Bahrain—faces mounting pressure to balance fiscal stability with geopolitical strategy.

Oilprice.com highlights that Gulf producers could be willing to leverage this chokehold to force a halt to the conflict. Declaring force majeure could instantly shift the balance of power in the region, as the United States and Israel would face the threat of a sustained global oil and gas shortage. Currently, both nations appear to have limited incentive to pause military operations, with Israel relying on U.S. support and President Trump signaling he is "not ready to declare victory" or accept current negotiation terms.

The GCC has strong justification for such a move. Saudi Arabia’s Ras Tanura refinery, capable of processing 550,000 barrels per day, was temporarily shut down following a drone attack attributed to Iran on March 2. Though damages were minor, the disruption resulted in significant revenue losses. Meanwhile, Qatar declared force majeure on its LNG operations after Iranian drone attacks on its Ras Laffan and Mesaieed industrial cities, cutting roughly 20% of global LNG supply. Ras Laffan alone houses 14 LNG trains with a combined capacity of 77 million metric tonnes per year, making it a linchpin of global LNG exports.

Financially, GCC nations are uniquely positioned to endure short-term pain. Sovereign wealth funds across the region manage nearly $5 trillion in assets, with Saudi Arabia’s Public Investment Fund alone holding over $1.15 trillion. Abu Dhabi’s ADIA and Kuwait’s KIA manage more than $1 trillion each, providing the liquidity needed to weather potential revenue shocks.

Yet the crisis underscores the limits of even the wealthiest Gulf economies. With millions of barrels stranded and fiscal pressure mounting, prolonged closure of the Strait of Hormuz could shrink regional GDP by as much as 22% over three to six months.

While a spike in oil prices might normally cushion the blow, the inability to physically move crude significantly complicates the calculus for Gulf producers, leaving them in a precarious strategic and economic position.

By Sabina Mammadli