Following recent escalations between the United States of America, the State of Israel, and the Islamic Republic of Iran, the strategic importance of the Strait of Hormuz has returned to the forefront of global economic concern. A recent comprehensive study by the General Secretariat of the Research Services Directorate of the Turkish Parliament that was released to Turkish news agencies today (4 March 2026) (the “Report”) underscores that while Turkey maintains a diversified energy portfolio, the global "domino effect" of a potential closure remains a critical risk for international businesses.
The Strait is the world’s most important energy chokepoint. To put the scale into perspective:
- Oil Flow: Approximately 20 million barrels per day (20% of global consumption).
- Gas Markets: 20% of global LNG and 33% of global LPG trade passes through these waters.
- Turkey’s Exposure: Roughly 20% of Turkey’s crude oil requirements are met via this route.
The critical issue is the legal status of the Strait and the Report confirms that despite the absence of a specific bilateral treaty between Turkey and Iran, the UN Convention on the Law of the Sea (UNCLOS) should be followed as the primary legal framework. UNCLOS was not signed or ratified by Turkey while the Iranian state signed but did not ratify the convention. Notwithstanding, the Report advises that UNCLOS provisions should still be followed by Iran.
Under UNCLOS,
- Innocent & Transit Passage: The right of transit passage for merchant vessels is protected, and
- Illegality of Blockades: Even during periods of high tension or conflict, unilateral attempts to close the Strait to international commerce are considered violations of international maritime law.
The Report also highlights a shift in perspective that is the “Domino Effect”: this is no longer just an "energy crisis." A disruption would trigger a massive supply shock in the Asia-Pacific region (China, India, Japan, South Korea), which serves as the world’s manufacturing hub. In this regard, shortages in semiconductors, automotive components, and pharmaceuticals would likely follow. The study also warns against cost volatility; accordingly, businesses should prepare for sudden fluctuations in freight insurance premiums (War Risk Surcharges) and logistics costs.
In the light of the current developments, some strategic recommendations would be to review the force majeure clauses to ensure your commercial contracts account for geopolitical disruptions and maritime blockades as potential force majeure events. Also, assessing dependency on Tier 1 and Tier 2 suppliers located in the Asia-Pacific region that rely heavily on Persian Gulf energy and exploring Supply Chain Diversification would be advisable. And finally, reviewing existing maritime and trade insurance policies to confirm coverage limits regarding regional instabilities should be considered by our clients.
Our firm is closely monitoring the legal and regulatory shifts resulting from Southwest Asian geopolitical tensions. We assist clients in navigating sanctions and complex cross-border trade regulations, restructuring supply chain contracts, and managing international dispute resolution risks. For further information, please contact our Energy & Infrastructure or International Trade teams.
