Energy Resilience And Shipping Lanes: The Twin 757 Challenges

The Iran conflict has stretched into its ninth week. What was widely expected to be a short campaign of a few weeks now seems to be running into months. There seem to be two possibilities at this stage when an uneasy ceasefire is holding and a blockade of the Hormuz Strait is in place.

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One view from the US is that the Iranian regime cannot withstand the economic pain much longer, as it cannot sell oil. Iran's latest signals indicate that she is willing to compromise on the Hormuz Strait but regards uranium enrichment as her sovereign right. The US has signalled that there cannot be a compromise on uranium enrichment, and on the Hormuz Strait some accommodation is possible. As pointed out in these columns (April 6, 2026), the US is self-sufficient in oil and gas production. President Trump has met oil executives and seems to be exploring price caps on gasoline to contain the domestic political fallout. The US seems to be prepared for the long haul if needed, and a blockade of disruption of oil supplies for several months may be on the cards.

The second view is Iran is unlikely to yield to the blockade. The country faced economic sanctions for decades and can withstand the additional pain inflicted by the blockade, as the regime is unconcerned about the suffering of the people and is not accountable to voters. In that case, the bombing of Iran will be resumed by the US and Israel, and all bets are off. Given the events so far, a resumption of war will lead to further destruction of Iranian infrastructure, and Iran may resort to unrestrained attacks on the oil and gas fields of the GCC countries, leading to potential permanent damage with long-term consequences to global energy supply.

Even if the conflict ends in the next couple of weeks and shipping traffic is fully restored in the Hormuz Strait, there will be global shortages of fuel for several weeks. More importantly, the world will always be on edge about energy security, and the Strait could be blocked at any time in the future. And the world will have to deal with a broken global system and the danger to vital shipping routes at critical choke points. Let us briefly look at these two challenges and lessons that have emerged from this crisis.

First and foremost is energy security. Most countries in the world will be scrambling for energy security. This quest for energy security will take three forms. One, importing countries will increase storage capacity and build much larger strategic reserves at enormous costs. Two, there will be a herculean effort to double or treble the present 7 mbd capacity of the East-West pipeline across the Arabian Peninsula from the Gulf to the Red Sea. In addition, massive investments are likely to be made in building pipelines and roads from the North to the South of the Arabian Peninsula to transport oil, gas, fertilisers, sulphur, and helium gas and other commodities. Once these commodities bypass the Gulf and reach the Arabian Sea via Oman, they can be shipped safely to the energy-hungry world. Three, more long-term efforts to ensure energy resilience and transition to renewable energies will be accelerated on a war footing in the next decade all over the world. Demand-side management, increasing production of biofuels, and, most of all, solar power generation, storage systems, electric vehicles, and efficient public transport systems—all these will be on the economic agenda of every country. Where required, coal use will increase for energy, and coal gasification will gain momentum. Otherwise, the greening of the planet will get a boost, albeit to reduce oil dependence, if not because of global warming concerns.

Second, the most pressing global concern will be to take credible steps to ensure that all the vulnerable sea lanes are open for shipping. For centuries, there has been remarkable global consensus on open sea lanes and maritime trade, which accounts for about 90% of the merchandise trade globally. There are several critical choke points in global shipping. By treaties and agreements these sea lanes are kept open, facilitating global trade. Now Iran's use of its geography to control the Hormuz Strait, one of the most vital supply routes, threatens the whole global economy. For nearly 4000 years, ships passed the Hormuz Strait freely, transporting goods between India and the Arab countries. The Malacca Strait, located between the Malay Peninsula and Sumatra (Indonesia), is a vital waterway connecting the Andaman Sea with the South China Sea. It is kept open, and shipping lanes are protected by agreements for the Strait’s management between Indonesia, Malaysia, and Singapore. Similarly, the Bab al-Mandab Strait, connecting the Red Sea with the Arabian Sea, is a vital shipping lane surrounded by unstable states—Djibouti, Yemen, Somalia, and Sudan. Houthis, a militant group supported by Iran and acting as its proxy, disrupted shipping in the Strait between 2023 and 2025.

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The Bosphorus and Dardanelles Straits, connecting the Mediterranean Sea with the Black Sea, are narrow sea lanes within the Turkish territory. The 1936 Montreux Convention guarantees free passage for merchant vessels in peacetime but restricts warships and authorises Turkey to block belligerent navies during war. Denmark controlled the Danish Straits for centuries and collected tolls on ships passing between the North Sea and the Baltic Sea. The Copenhagen Convention of 1857 ended toll collection and mandated the right of free passage for all vessels. The Strait of Gibraltar links the Mediterranean Sea with the Atlantic Ocean and is governed by the UNCLOS, allowing free passage to all ships.

In addition to these six vital sea lanes, there are two canals dug between oceans to facilitate easy transport of goods. The Suez Canal, connecting the Red Sea with the Mediterranean Sea, passes through Egypt and was completed in 1869. After the 1956 nationalisation of the canal, Egypt fully controls the canal and ensures free passage to all vessels. The Panama Canal, connecting the Atlantic Ocean with the Pacific Ocean, passes through Panama. The Panamanian government took control of the canal in 1999, and the relevant treaty guarantees that the Panama waterway is permanently neutral and the US has the permanent right to guarantee the canal's permanent neutrality.

The disruption of shipping in the Strait of Hormuz creates a dangerous precedent and potentially threatens the future of all the vital shipping lanes. The global community should act in concert to protect global shipping routes and vital supply chains.

The author is the founder of the Lok Satta movement and the Foundation for Democratic Reforms. Email: [email protected] / Twitter@jp_loksatta

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