Strait of Hormuz: Why Iran’s Grip on the Vital Waterway Won’t Loosen Anytime Soon

Since the outbreak of conflict between the U.S. and Israel against Iran in late February, the Strait of Hormuz has become a focal point of geopolitical tension. Jared Cohen, co-head of the Goldman Sachs Global Institute, warns that unless Iran’s regime collapses, the vital shipping lane will never return to its previous state of openness.

The strait’s closure or partial control by Iran has significant implications for global energy markets and regional security. As both sides engage in a tense maritime standoff, Gulf nations are scrambling to reduce their dependence on this critical passage, signaling a long-term shift in energy logistics and regional power dynamics.

Iran’s Strategic Leverage Over Global Energy

Jared Cohen highlights how Tehran has realized the immense leverage it holds by controlling the Strait of Hormuz, a crucial artery for global oil shipments. Since the conflict began, Iran has used fast-attack boats to harass commercial vessels, effectively keeping the strait partially closed and driving energy market instability.

Despite some traffic still passing through, Cohen predicts Iran will maintain unilateral control, using the strait as a bargaining chip in the ongoing conflict.

The Maritime Standoff: A New Kind of Warfare

The current situation resembles 'maritime trench warfare,' with the U.S. Navy enforcing a blockade on Iran-linked ships and deploying Marines to seize vessels, aiming to cut off Tehran’s revenue streams. Meanwhile, Iran’s Islamic Revolutionary Guard Corps continues aggressive maneuvers, keeping tensions high.

“It’s a game of geopolitical chicken between the United States and the Iranians over who’s going to swerve first, and they both have the same theory of change.”—Jared Cohen

Gulf States’ Strategy: Diversification and Detachment

Neighboring Gulf Cooperation Council countries view a lasting peace as unlikely while Iran remains in power. Instead, they are focused on reducing their vulnerability by developing alternative export routes that bypass the Strait of Hormuz.

• Saudi Arabia has rerouted much of its oil exports through the East-West Pipeline to the Red Sea.
• The United Arab Emirates is expanding pipelines to Fujairah on the Gulf of Oman, aiming to eliminate its reliance on the strait within a few years.
• These efforts aim to downgrade the Strait of Hormuz to a 'commercial afterthought,' reducing the region’s exposure to Iranian control.

Looking Ahead: A Sloppy Peace or Continued Uncertainty?

Cohen envisions a future where a 'sloppy ceasefire' evolves into a 'sloppy peace'—a fragile arrangement with half-measures on key issues. Iran might agree to limit missile attacks but retain a significant arsenal, while oil tankers could transit the strait with the constant threat of closure looming.

Meanwhile, ongoing U.S.-Iran negotiations remain stalled, and Gulf states continue to hedge their bets by diversifying energy routes. The global economy faces mounting risks of fuel shortages, with analysts warning of potential crises in the coming months.