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So, I went down a rabbit hole on the Strait of Hormuz and honestly, the more you read, the more you realize just how much of the global economy is riding on a stretch of water that's about 21 miles wide at its narrowest point. That's it. 21 miles between business as usual and a potential energy crisis.
The strait sits between Oman and Iran, connecting the Persian Gulf to the Gulf of Oman. The countries bordering it — Saudi Arabia, UAE, Kuwait, Iraq, Qatar, Bahrain, and Iran — are collectively responsible for a staggering share of global oil exports. Estimates put it at around 20% of the world's total oil supply passing through on any given day. Some sources put the figure even higher when you factor in LNG shipments.
The chokepoint is not hypothetical. Iran has threatened closure multiple times. In 2019 alone, several oil tankers were seized or attacked in or near the strait. The US Fifth Fleet operates out of Bahrain specifically because of this.
What makes this really interesting from an investment perspective is the asymmetry of outcomes. When things are calm, the strait doesn't make headlines. Oil flows, tankers move, prices reflect supply-demand fundamentals. But the moment tensions spike — and they do, periodically — the market doesn't wait for actual disruption. It prices in fear immediately.
We saw this clearly in the late 2010s during the Iran nuclear deal fallout. Just the rhetorical back-and-forth between Washington and Tehran was enough to send Brent crude jumping several percentage points in a matter of days. No ships were actually stopped. Just words. That's how sensitive this is.
The thing that keeps analysts up at night isn't a full closure — that's seen as unlikely for sustained periods because it would hurt Iran too — but rather a harassment campaign. Sporadic seizures, drone attacks on tankers, mines. That kind of low-grade friction drives up insurance premiums, forces rerouting, and creates exactly the kind of supply uncertainty that oil markets absolutely hate.
There is no good alternative route. The Suez Canal is already near capacity. Saudi Arabia has a pipeline — the East-West pipeline — that bypasses the strait, but its capacity covers only a fraction of what currently transits Hormuz. A real disruption would be felt everywhere within weeks.
For anyone watching energy stocks, the Hormuz premium is always baked in to some degree. But in periods of calm, it gets forgotten. That's usually when it's worth paying attention. Geopolitical risk doesn't disappear when it stops trending on the news.
The underlying dynamic hasn't changed in decades: the global economy runs on cheap, reliable energy, and a significant chunk of that energy passes through a narrow channel that one regional power could meaningfully threaten on relatively short notice. That tension is structural, not episodic.
So, with that backdrop, a few names that tend to do well when Hormuz anxiety is elevated:
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