Strategic importance of the Strait of Hormuz

U.S. Treasury Secretary Scott Bessent has predicted that the Strait of Hormuz will become ‘insignificant’ or ‘worthless’ to the oil industry within two years. He suggests that global energy transport will shift toward land-based pipeline networks, reducing the strategic leverage of Iran.

This transition follows joint military operations by the U.S. and Israel against Iran, during which Iran threatened to close the waterway and fired upon vessels. In response to these tensions, regional actors are developing alternatives: the UAE is increasing export capacity via a pipeline to Fujairah, Saudi Arabia is considering Red Sea pipeline expansions, and the U.S. facilitated a pipeline repair agreement between Iraq and Syria.

Bessent noted that the Strait is no longer a primary vulnerability for U.S. energy security, citing that U.S. crude imports from Persian Gulf nations have reached a 40-year low. While market analysts remain skeptical of the transition speed—noting that weekly blockades currently cause global losses exceeding 100 million barrels of oil—the shift toward land-based routes is expected to fundamentally reshape global energy logistics.