World Insights: Hormuz Strait crisis prompts global energy rethink

**TEHRAN** — The crisis in the Strait of Hormuz has deepened as Iran stated that the vital energy chokepoint will remain closed unless the United States changes its behavior and accepts Iranian conditions for ending the conflict.

The ongoing disruption has strained the global energy system, prompting governments in the Gulf and internationally to seek diplomatic resolutions while exploring alternative transport routes and reassessing long-term energy security strategies.

### Diplomatic Deadlock

Although U.S. President Donald Trump stepped back from threatened military strikes against Iran earlier in the month, citing progress in talks, mediators reported that diplomacy has stalled. The impasse centers on Iranian demands for financial relief and U.S. insistence that commercial shipping traffic remain unhindered.

Iranian Foreign Minister Seyed Abbas Araghchi stated that an agreement with Oman regarding shipping through the strait was in its final stages, but reiterated that fully reopening the waterway depends on whether the United States meets Tehran’s conditions. These conditions include compensation for war damage, the lifting of sanctions, and the release of frozen Iranian assets. Tehran has also stated it will bar U.S. Navy warships from passing through the strait as part of any reopening deal.

President Trump pushed back, stating that he is similarly demanding compensation from Iran and that the issue will be part of any future negotiations.

Kpler oil analyst Naveen Das said Washington is unlikely to accept Iranian control over shipping, while marine insurers may hesitate to cover vessels that pay fees to Tehran. Alan Eyre, a former U.S. diplomat and Iran expert, noted that Tehran is utilizing the strait as leverage to prevent Washington from dictating the timeline of events. Jonathan Panikoff, a former senior U.S. intelligence officer with the Atlantic Council, suggested that regardless of U.S. actions, the outcome may result in significant de facto Iranian control over the strait.

### Exploring Alternatives

U.S. Treasury Secretary Scott Bessent stated in a recent interview that the Strait of Hormuz could become irrelevant within two years as energy is increasingly diverted through alternative corridors.

Regional nations are currently working to expand transport capacity:
* **Saudi Arabia** is considering expanding the capacity of its crude oil pipeline to the western Red Sea coast by up to 2 million barrels per day. The pipeline can currently transport up to 7 million barrels per day to the port of Yanbu.
* **The United Arab Emirates** announced in May that it is fast-tracking a new oil pipeline to bypass the strait, which is projected to double crude export capacity via the port of Fujairah by 2027.
* **Iraq and Turkey** signed an agreement on August 1 to boost crude exports through the Kirkuk-Ceyhan pipeline, targeting a flow of 750,000 barrels per day.

However, energy experts warn that these alternatives cannot immediately replace the Strait of Hormuz. While pipeline expansions can take years to complete, countries such as Qatar and Kuwait lack alternative overland routes. Furthermore, liquefied natural gas (LNG) is difficult to reroute due to specialized infrastructure requirements. With approximately one-fifth of global LNG supplies having passed through the strait prior to the conflict, exporters remain heavily dependent on the waterway.

Energy economist Carole Nakhle told *The New Arab* that alternative routes serve as complements rather than substitutes for Hormuz, noting that they improve resilience without eliminating risk.

### Shift in the Energy Mix

According to Reuters columnist Clyde Russell, a lasting legacy of the conflict may be a renewed push by energy-importing nations to reduce their reliance on fossil fuels.

A report by the Energy Transitions Commission indicated that the war exposed structural vulnerabilities in the global energy system, specifically a heavy reliance on geographically concentrated fossil fuel supplies and critical transit routes. In contrast, the report described clean-energy systems as structurally immune to such shocks.

In Australia, the government has allocated 4.0 million Australian dollars (2.8 million U.S. dollars) for a pre-feasibility study regarding a new refinery. Additionally, mining companies such as Fortescue Metals Group are transitioning toward electric mining vehicles and renewable power, while the Federal Chamber of Automotive Industries reported that electrified vehicle sales more than tripled year-on-year in July.

“Energy security will require diversification both in where countries source their energy and the types they consume,” Russell said.

Article and image source: iraqsun.com