What is it?
The Strait of Hormuz is a narrow strip of water between Iran and Oman that connects the Persian Gulf to the rest of the world's oceans. At its narrowest point it is just 39 kilometres wide. The actual shipping lanes — two miles in each direction — are narrower still.
It is the most important single piece of water on earth for global energy supply. Around 20 percent of the world's oil and gas passes through it every single day. When it is open, the global economy runs. When it is threatened, the entire world feels it — including New Zealand, at the very far end of that supply chain.
Why does one narrow waterway control so much?
The Persian Gulf is essentially a large enclosed sea. Saudi Arabia, Iraq, Kuwait, Qatar, the UAE, Bahrain, and Iran all sit inside it. The oil they produce — roughly 20 percent of global supply — has to get out somehow.
There is only one way out by sea. The Strait of Hormuz.
Saudi Arabia and the UAE have some pipeline infrastructure that can bypass the strait — but their combined capacity covers only about a third of normal Gulf exports. Iraq, Kuwait, Qatar, and Iran have no meaningful alternative routes at all. Around 14 million barrels per day are structurally dependent on those two miles of shipping lane.
Before the 2026 conflict, 138 ships transited the Strait of Hormuz every day. At the peak of the crisis in early March 2026, that fell to a single commercial vessel.
What goes through it?
Oil is the most discussed — but not the only critical commodity.
Around 20 million barrels of crude oil and refined products passed through the strait every day in 2025, accounting for roughly 25 percent of all seaborne oil trade globally.
Asia is the primary destination. In 2024, 84 percent of crude oil moving through the Strait of Hormuz was headed to Asian markets. China alone received 37 percent of total flows. South Korea received 12 percent. Japan received 11 percent. These are exactly the countries where New Zealand sources its refined fuel.
Liquefied natural gas is also critical. Qatar — the world's third largest LNG exporter — has no alternative export route. Europe gets 12 to 14 percent of its LNG through the strait.
Fertiliser is less discussed but significant. The Persian Gulf region accounts for 30 to 35 percent of global urea exports and 20 to 30 percent of global ammonia exports. Both transit through the Strait of Hormuz. When the strait closes, fertiliser prices rise — which means food prices follow.
What happened in 2026?
On 28 February 2026, the United States and Israel launched coordinated strikes on Iran under Operation Epic Fury. Iran responded with missile barrages across the Gulf region and effectively closed the Strait of Hormuz to commercial shipping.
The closure was described by the IEA as the largest disruption to world energy supply since the 1970s oil crisis.
Major shipping companies — Maersk, Hapag-Lloyd, CMA CGM — immediately suspended operations through the strait and began rerouting vessels around the Cape of Good Hope, the southern tip of Africa. That adds roughly two to three weeks of sailing time to any voyage between the Gulf and Asia.
At its peak, around 2,000 ships — including oil tankers, bulk carriers, cargo ships, and six cruise liners — were stranded in the Persian Gulf unable to leave. An estimated 20,000 seafarers were trapped aboard those vessels. Twenty-one confirmed attacks on international shipping occurred during the crisis, with ten seafarer fatalities.
The IEA triggered its largest ever emergency reserve release — 400 million barrels — in an attempt to stabilise global supply. New Zealand contributed by releasing its IEA oil tickets.
Is there any way around it?
Partially — but not fully.
Saudi Arabia has the East-West Crude Oil Pipeline running from its Gulf oilfields to the Red Sea port of Yanbu. During the crisis it ran this pipeline at full capacity — 7 million barrels per day. The UAE has a pipeline to Fujairah on the Gulf of Oman with a capacity of 1.5 million barrels per day.
Together these alternative routes can handle roughly a third of normal Gulf crude exports. The other two thirds — around 14 million barrels per day — have no practical alternative route.
For Qatar's LNG exports there is no bypass at all. The gas has to go through the strait or not go anywhere.
Rerouting vessels around the Cape of Good Hope is possible but adds significant time and cost to every voyage. During the 2026 crisis this was the primary workaround for most shipping companies — but it does not replace supply, it only delays it further.
What does this mean for New Zealand?
New Zealand sources approximately 80 percent of its refined fuel from refineries in South Korea and Singapore. Both countries rely heavily on crude oil from Saudi Arabia and the UAE — crude that normally moves through the Strait of Hormuz.
When the strait closed in February 2026, those Asian refineries were squeezed on crude supply. They processed less fuel. They exported less to New Zealand. And New Zealand — which closed its only oil refinery in 2022 and now imports 100 percent of its finished fuel — had no domestic fallback.
The connection between a narrow waterway in the Middle East and the price at a petrol station in Palmerston North is direct and fast. New Zealand is as exposed to the Strait of Hormuz as any country in the world, despite being about as far from it as it is possible to be.
Where things stand now
A two-week ceasefire between the US and Iran was announced on 9 April 2026. As of the date of publication, the Strait of Hormuz remains only partially open — Iran is limiting the number of ships that can transit and charging fees for passage. Around 2,000 ships remain stranded in the Persian Gulf awaiting safe exit.
Even if the strait fully reopens, the supply chain disruption will take weeks to unwind. Refineries need time to rebuild crude stocks. Tankers take 20 to 30 days to reach New Zealand from Asia. The fuel that was not produced during the weeks of reduced refinery output simply does not exist and cannot be replaced instantly.
The ceasefire is the most encouraging development since the crisis began. It is not the end of the problem.
Appears in
This building block connects to the following articles in the Kiwi Unity library as they are published.
🧱Why is fuel so expensive right now?→
🧱Is New Zealand about to run out of fuel?→
Sources
International Energy Agency — Strait of Hormuz
US Energy Information Administration — Strait of Hormuz as Critical Oil Chokepoint
Wikipedia — 2026 Strait of Hormuz Crisis
UN News — Iran Ceasefire Raises Hopes for Reopening Key Strait of Hormuz
Dallas Federal Reserve — What the Closure of the Strait of Hormuz Means for the Global Economy
CNBC — The Strait of Hormuz Crisis Explained
Al Jazeera Centre for Studies — The Strait of Hormuz: Global Economic Shock and the Limits of Military Power