Omer Ghazi
Globalisation is often imagined as the triumph of economics over geography. Capital moves instantly, information ignores borders and markets connect societies separated by oceans. Yet the physical foundations of this system remain surprisingly fragile. Much of the world’s energy still passes through a handful of narrow waterways, where a relatively weak state can impose costs upon countries far more powerful than itself.
The Strait of Hormuz now illustrates this contradiction. On 16 July, only three commodity vessels crossed it, while no LNG carrier or very large crude tanker completed the passage for the second consecutive day. Iran did not need to build an impenetrable naval blockade. It merely created enough danger for shipowners, insurers and crews to withdraw voluntarily. Fear accomplished what the Iranian navy could not.
For decades, economic sanctions have reflected the hierarchy of international power. The strongest states could exclude weaker ones from financial networks, restrict their access to technology and determine which goods they were permitted to sell. Iran has lived under precisely such a system. Hormuz, however, gives Tehran an opportunity to reverse this relationship.
It cannot remove the United States from the global financial order, but it can threaten the ships, energy supplies and trading interests of countries aligned with it. The sanctioned state is attempting to become the sanctioning power. By turning passage through an international waterway into something conditional, Iran is not merely retaliating against military pressure. It is constructing an informal sanctions regime of its own, enforced not through banks and institutions, but through fear.
This emerging regime is already visible in the diplomacy surrounding the strait. The arrangement reached in June between US and Iran connected the restoration of safe commercial passage with limited sanctions relief for Iran. When it began to unravel, Tehran again restricted passage for vessels it considered unauthorised, turning a legal right of transit into a negotiable privilege. The distinction is important.
A complete and permanent closure would damage Iran and its partners as well as its adversaries. Selective access offers far greater leverage. Friendly traffic can be tolerated, hostile commercial interests threatened and neutral states encouraged to seek separate assurances. Iran may therefore be attempting something more ambitious than closing Hormuz. It may be claiming the authority to decide who is allowed to pass through it.
The crisis has already created a market for precisely this kind of permission. In April, shipping companies received fraudulent messages offering Iranian “clearance” through Hormuz in exchange for payments in Bitcoin or Tether. The messages did not come from Tehran, but they revealed what its strategy had made possible. Once captains could no longer know whether international law, nationality or private payment determined their safety, even criminals could begin selling passage through one of the world’s most important waterways.
The fraud worked because the underlying uncertainty was real. A route that should have remained open to commercial traffic had begun to resemble territory controlled by an armed group, where travellers seek private assurances before crossing. Iran had not formally imposed a toll. It had created the conditions in which protection itself could be sold.
The most revealing response came from Washington itself. In July, President Donald Trump proposed a 20 per cent charge on cargo passing through Hormuz to recover the cost of American maritime protection. The proposal was abandoned a day later after opposition from the International Maritime Organization and shipping companies, but its implications were considerable. Iran’s coercion had begun to alter how even the power defending freedom of navigation understood the strait. An international waterway was being discussed as a service that could be controlled, secured and monetised.
The countries paying this price are not necessarily those fighting the war. Nearly 80 per cent of the oil and petroleum products passing through Hormuz in 2025 were destined for Asia. The strait also carried more than 110 billion cubic metres of liquefied natural gas, including approximately 93 per cent of Qatar’s and 96 per cent of the UAE’s LNG exports. These volumes cannot simply be redirected through another waterway. Iran’s confrontation may be primarily with the United States and Israel, but much of its economic punishment travels eastward. India, Japan, South Korea and poorer Asian economies can remain militarily neutral and still suffer higher energy prices, transport costs and inflation. In an interdependent world, neutrality may keep a country outside the battlefield. It cannot keep the battlefield outside its economy.
Not every country can absorb this shock equally. Wealthy states have strategic oil reserves, multiple suppliers and enough money to protect consumers temporarily. During the Hormuz crisis, the International Energy Agency coordinated the release of up to 400 million barrels to contain the rise in prices. Poorer importers have far fewer options. They must buy expensive energy, reduce consumption or divert public money from welfare and development. The result is deeply unequal. Iran claims to be resisting Western power. Yet the cost of that resistance is increasingly borne by societies far poorer than the West.
The damage also travels far beyond the fuel pump. Natural gas is a major input in the production of nitrogenous fertilisers, which means disruption at Hormuz can eventually affect the price and availability of food. Sudan receives 54 per cent of its seaborne fertiliser imports through the strait, while Sri Lanka receives 36 per cent. For such countries, a delayed shipment can collide with planting seasons that cannot simply be postponed. Oil reserves may buy governments a few weeks, but agriculture follows a calendar that diplomacy cannot reset. A missile fired near a tanker can therefore reappear months later as a smaller harvest or a more expensive bag of grain. Maritime coercion becomes most effective precisely where its victims are least visible and least capable of responding.
Behind these figures are the people who physically carry globalisation across the sea. By late April, the International Maritime Organization had verified 29 attacks on vessels around Hormuz and the Persian Gulf, killing at least 10 seafarers. Nearly 20,000 others remained aboard some 1,600 vessels in the region. Yet merchant crews rarely appear in discussions dominated by oil prices and naval strategy. A ship may be owned in one country, registered in another, insured in a third and staffed by Indians, Filipinos or Bangladeshis carrying cargo to a fourth. This fragmentation makes responsibility easy to evade. No government feels complete ownership of their safety. They become combatants without citizenship in the conflict, placed in danger by political decisions over which they have no influence.
The attack on the tanker MT Settebello in June made this human cost impossible to reduce to an economic statistic. Three seafarers were killed near the Strait of Hormuz while performing civilian work aboard a commercial vessel. They were not soldiers enforcing a blockade or officials designing sanctions against Iran. Their vulnerability was precisely what gave the attack its wider power. Violence against one ship communicates danger to every crew approaching the region, every company considering a shipment and every government dependent upon its cargo. This is where Iran’s maritime strategy begins to acquire the logic of terrorism. The immediate victims are civilians, but the intended audience is global. The physical attack remains local. The fear is designed to travel.
Iran, long subjected to economic exclusion, is now attempting to build an exclusionary system of its own at sea. If this coercion earns political concessions, the world will not merely have reopened a waterway. It will have legitimised an authoritarian to decide which countries may trade, which economies must suffer and which sailors may pass safely. Hormuz cannot become Iran’s private checkpoint. No state can be allowed to turn geography into immunity and globalisation into a human shield.
Contributing Author: Omer Ghazi is a proponent of religious reform and extensively writes on geo-politics, history and culture.
Disclaimer: The opinions expressed within this article are the author’s personal opinions. The Australia Today is not responsible for the accuracy, completeness, suitability, or validity of any information in this article. The information, facts, or opinions appearing in the article do not reflect the views of The Australia Today, and The Australia Today News does not assume any responsibility or liability for the same.
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