The Strait of Hormuz is considered the world's most important gateway for oil transport. With Iran now threatening to close the waterway, industrialized nations are on edge.
Chinahas called on the international community to work toward de-escalation of the Iran crisis, given the mounting risk of a blockade of the Strait of Hormuz at the mouth of the Persian Gulf.
Foreign Ministry spokesman Guo Jiakun said Monday that China was working to prevent instability in the region caused by theIsrael-Iran warfrom spilling over into the global economy.
Iran's parliament on Sunday backed closing the vital waterway, saying the move has come in response to the bombing of Iran's nuclear facilities by theUnited Statesover the weekend.
After the decision, a senior Iranian lawmaker, Esmaeil Kowsari, told reporters in Tehran that parliament has concluded it should close the strait, but added that "the final decision lies with the Supreme National Security Council."
Meanwhile, US Secretary of State Marco Rubio has called on China to prevent Iran from closing the strait.
"I would encourage the Chinese government in Beijing to call them [Iran] about that, because they heavily depend on the Strait of Hormuz for their oil," Rubio said in an interview with Fox News on Sunday.
"If they [close the strait]… it will be economic suicide for them. And we retain options to deal with that," he said.
The Strait of Hormuz is a key waterway that lies between Oman andIran, and connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.
The US Energy Information Administration (EIA)describes it as the "world's most important oil transit chokepoint."
At its narrowest point, the waterway is just 33 kilometers (21 miles) wide, with the shipping lane just 2 miles wide in either direction, making it crowded and perilous.
Large volumes of crude extracted byOPEC countrieslike Saudi Arabia, the United Arab Emirates, Kuwait and Iraq from oil fields across the Persian Gulf region and consumed globally flow through the strait.
Around 20 million barrels of crude, condensate and fuels are estimated to flow via the waterway daily, according to data from Vortexa, an energy and freight market consultant.
Qatar, one of the world's largest producers ofliquefied natural gas (LNG), relies heavily on the strait to ship its LNG exports.
The conflict between Israel and Iranhas put renewed focus on security in the waterway.
In the past, Iran has threatened to close the Strait of Hormuz for traffic in retaliation to Western pressure.
Since the war between Israel and Iran broke out earlier this month, however, there haven't been any major attacks on commercial shipping in the region.
But shipowners are increasingly wary of using the waterway, with some ships having tightened security and others canceling routes there, the AP news agency reported.
Electronic interference with commercial ship navigation systems has surged in recent days around the waterway and the wider Gulf, naval sources told the Reuters news agency. This interference is having an impact on vessels sailing through the region, they said.
As there appears to be no immediate end to the conflict, markets remain on edge. Any blockade of the waterway or disruptions to oil flows could trigger a sharp spike in crude prices and hit energy importers hard, particularly in Asia.
Meanwhile, tanker rates for vessels carrying crude and refined oil products from the region have jumped in recent days.
The cost to ship fuels from the Middle East to East Asia climbed almost 20%, Bloomberg reported last week, citing data from the Baltic Exchange. Rates to East Africa, meanwhile, jumped more than 40%.
The EIA estimates that 82% of crude and other fuel shipments that traversed the strait went to Asian consumers.
China, India, Japan and South Korea were the top destinations with these four countries, together accounting for nearly 70% of all crude oil and condensate flows that traversed the strait.
These markets would likely be most affected by supply disruptions.
If Iran takes concrete action to close the strait, it could potentially draw military intervention from the United States.
The US Fifth Fleet, based in nearby Bahrain, is tasked with protecting commercial shipping in the area.
Any move by Iran to disrupt oil flows through the waterway could also jeopardize Tehran's ties with Gulf Arab states like Saudi Arabia and the United Arab Emirates — countries with which Iran has painstakingly improved relations in recent years.
Gulf Arab countries have so far criticized Israel for launching the strikes against Iran, but if Tehran's actions obstruct their oil exports they might be pressured to side against Iran.
Moreover, Tehran itself relies on the Strait of Hormuz to ship its oil to its customers,making it counterproductive to close the strait, say experts.
"Iran's economy heavily relies on the free passage of goods and vessels through the seaway, as its oil exports are entirely sea-based," Reuters quoted JP Morgan analysts Natasha Kaneva, Prateek Kedia and Lyuba Savinova as saying. "Cutting off the Strait of Hormuz would be counterproductive toIran's relationship with its sole oil customer, China."
Gulf Arab nations like Saudi Arabia and the UAE have sought alternative routes to bypass the strait in recent years.
Both countries have set up infrastructure to transport some of their crude via other routes.
Saudi Arabia, for instance, operates the East-West Crude Oil Pipeline with a capacity of 5 million barrels per day, while the UAE has a pipeline linking its onshore oil fields to the Fujairah export terminal on the Gulf of Oman.
The EIA estimates that around 2.6 million barrels of crude per day could be available to bypass the Strait of Hormuz in the event of disruptions in the waterway.
Editor's note: This article was first published on June 18, 2025, and updated on June 23 to incorporate the decision by Iran's parliament to propose a closure of the strait.