Economist Mohamed A. El-Erian highlighted escalating global risks stemming from a potential “blockade of the blockade” in the Strait of Hormuz, as tensions between the U.S. and Iran threaten to disrupt critical energy flows.
Iran Faces Revenue Hit
El-Erian, on the social media platform X on Monday, noted that Iran itself is at the centre of the fallout. A full disruption could cut into its oil export revenues and eliminate income generated from informal “tolls” charged to select vessels previously allowed to pass through the Strait of Hormuz.
Importers Under Pressure
Countries, such as China and Pakistan, which had managed to secure limited oil flows, could face tighter supply constraints, raising energy security concerns.
Risk of U.S. Kinetic Conflict Rise
The U.S. might also face risk as it is committed to deploying additional military assets to enforce a counter-blockade. El-Erian warned that this raises the probability of direct kinetic conflict, potentially escalating geopolitical tensions in the region.
Global Economy Impact
The Strait of Hormuz accounts for a significant share of global oil shipments. El-Erian also pointed to the wider economic consequences, warning that disruptions in Hormuz could trigger another surge in prices for energy and key industrial inputs such as helium and fertilizers.
El-Erian outlined “Companies, countries, and households worldwide are facing the burden of what is likely to be another leg up in the price of energy, helium, fertilizers, etc.”
Photo Courtesy: miss.cabul on Shutterstock.com
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