What the Closure of the Strait of Hormuz Would Mean for Global and Greek Economies

The scenario of Iran shutting down the Strait of Hormuz has returned to the global agenda with serious implications for international stability, especially following heightened tensions involving U.S. military involvement in the Israel-Iran conflict. While markets currently remain relatively calm, escalating crises could lead to a complete closure of the strait, triggering a potential global energy shock that would significantly impact Greece’s economy. The Strait of Hormuz serves as a vital energy corridor for the world, with massive volumes of oil and derivatives passing daily through its narrow waters. According to data from the Energy Information Administration, in 2024 it accounted for one-fifth of global supply. Saudi Arabia, Iraq, the UAE, Kuwait, and Qatar rely heavily on this passage for their exports. Goldman Sachs estimates that oil prices could exceed $100 per barrel if the strait remains closed for an extended period, while JP Morgan predicts prices might soar up to $120 in extreme cases. Analysts warn that prolonged blockage could push the global economy into recession due to the lack of viable alternatives. Only Saudi Arabia and the UAE have limited options to reroute shipments via pipelines, but these are insufficient to meet demand. A closure would also disrupt liquefied natural gas (LNG) supplies, particularly affecting Europe post-Russia-Ukraine war. For Greece, the economic risks are profound. As a net importer of energy, increased import costs would fuel inflation, impacting fuel, electricity, and transportation prices. Shipping, a critical sector for Greece, faces operational challenges with nearly 1,200 Greek-flagged vessels transiting the area annually. Enhanced security measures have been implemented, including revised operational guidelines by NAFTA. Insurance premiums for ships operating in the region have surged, making voyages economically challenging or prohibitive. The Greek government is actively addressing the issue at the EU level, seeking coordinated diplomatic interventions and energy support mechanisms. In conclusion, any partial or full closure of the Strait of Hormuz poses significant threats to both global and Greek economies, necessitating immediate contingency planning.