THE STRAIT OF HORMUZ: LEGAL AND ECONOMIC CHALLENGES

Abstract

An estimated 17–21 million barrels of crude oil and about one-fifth of global LNG traffic transit through the Strait of Hormuz every day, making it one of the world's most significant maritime choke points. This study analyzes the Strait from legal and economic perspectives, with an emphasis on its governance under international maritime law and its effects on global energy security. The main goal is to investigate the interplay between legal systems, particularly UNCLOS, and geopolitical conflict and their effects on the economic stability of global energy markets. The research method applied in this study is qualitative, using doctrinal legal analysis and the interpretation of economic consequences through a scenario approach. The legal aspect examines the principle of transit passage in UNCLOS Articles 37-44 and discusses the scope of coastal states' authority. The economic dimension assesses the probability of disruptions to oil prices, shipping, insurance, and trade flows in scenarios of instability involving price declines or increases. The results indicate that there is no real harmonization between the law and geopolitical practice, with strategic rivalry and security concerns at times prevailing over the law. In the economic sector, even a small disruption in the Strait results in price instability; a significant disruption can have a greater impact on inflation, which can destabilize supply chains. The Strait of Hormuz is a node of systemic risk in which legal-framework uncertainty and geopolitical risks compound, making energy markets even more vulnerable, the study reveals.