Within days of the U.S. and Israeli attack on Iran on February 28, Tehran nearly shut the Strait of Hormuz. Roughly 20 percent of the world's oil and liquefied natural gas transit this chokepoint daily. Oil prices soared 55 percent in three weeks, gasoline jumped by roughly a dollar a gallon, and many countries began rationing fuel, shortening workweeks, and closing factories.
The scale of disruption has stunned policymakers worldwide, Jason Bordoff and Meghan L. O'Sullivan have argued in "Hvylya", citing their analysis published in Foreign Affairs. The International Energy Agency has called it the largest disruption of global energy flows in history.
The crisis has shattered a longstanding assumption: that a country badly outmatched militarily could not threaten the global economy. Iran did not need to win a conventional war - it only needed to exert effective control over shipping through the strait. Drones and cyberweapons have made such disruption cheaper, easier, and more sustainable than ever before.
Analysts and officials had warned for decades that the Strait of Hormuz was vulnerable, yet the speed with which the entire global economy was put in jeopardy came as a surprise. Subsequent Iranian and Israeli strikes on key energy installations in the region only deepened the crisis. The norm against targeting civilian energy infrastructure has been eroding - visible in Russia's attacks on Ukraine's electric grid and in Trump's threat to attack Iranian power stations in late March.
There are now many ways to constrict energy flows beyond direct attacks on production, the authors have noted. Shipping, insurance, finance, and payment systems can all become targets. In a world of cheap drones and interconnected markets, even a relatively weak power can hold the global economy hostage through a single chokepoint.
Also read: "Hvylya" earlier analyzed how Iran's missile launches handed Israel an unexpected strategic advantage.