PAYNE INSTITUTE COMMENTARY SERIES: COMMENTARY

By Jahara Matisek and Morgan Bazilian

April 20, 2026

The Strait of Hormuz does not need to be shutdown to wreak havoc on the global economy. It has already become unreliable – and those repercussions will be long lived.

Since Iran’s closure of Hormuz, and its selective reopening, the world has gotten a harsh lesson in this reality – one that has been seen as a unlikely possibility in war games for decades. Traffic through the 21-mile-wide chokepoint, which normally averages 138 vessels a day, has collapsed to a trickle especially as the U.S. Navy begins its odd counter-blockade of the Strait. This has caused the largest supply disruption in the history of the oil market – even bigger than the crises 1973 and 1979. Brent crude surged past $120 a barrel, and war-risk insurance premiums for a single tanker transit climbed to hundreds of thousands of dollars, and some actuaries would not even provide a quote.

The hope of many seems to be that a shared self-interest will eventually force a coordinated reopening or partnership on expanded alternative pipeline routes. The President Trump noted that the Strait will, “open itself”. China needs energy, Europe needs price stability, and the Gulf monarchies need their export revenue. The incentives, we are told, will align.

But, this is a dangerous misreading of the problem. The real issue is that it’s much easier to disrupt the Strait than to protect it reliably over time – and the damage has been done already.

Beijing benefits from energy stability, but it also benefits from higher global prices for a West it sees as a rival, and from discounted Iranian crude. Much like how China has benefitted from Western sanctions against Russia, since they get to buy Russian resources at a major discount. Gulf states want their exports flowing, but they are obviously reluctant to escalate against Iran due to the potential of further attacks against their ports, desalination plants, LNG facilities, and other critical infrastructure. The result is not unity, but fragmentation.

The Hormuz crisis is not primarily diplomatic; it is structural. The trap is built around a brutal asymmetry. Disruption is cheap; protection is expensive.

Iran does not need to sink every tanker or mine all of the channel. It only needs to make passage feel unsafe—and that has already been accomplished. A sporadic number of Shahed drones, fast attack boats, anti-ship mines, or anti-ship missiles are enough to do the job. Tehran appears to have built deep stocks of these low-cost, deniable tools. Essentially, Iran gets to impose just enough uncertainty that insurance markets do the rest of the economic damage.

Keeping the waterway reliably open requires continuous naval presence, air and missile defense, mine sweeping, surveillance, logistics, and political patience across a wide maritime battlespace. This is not a one-time military operation. It is a sustained, costly operational and industrial burden.

Recent operations have already exposed the limits of Western industrial throughput. High-volume use of air defense interceptors (e.g., Patriot, SM-3, and THAAD) draws down finite stockpiles at rates that production lines struggle to match. Replenishment timelines extend into years, even with expanded production. Warships cycle through maintenance, reducing presence and stressing an already overstretched U.S. Navy. Surveillance assets are even more strained, with reports indicating that the U.S. Air Force has lost at least 24 MQ-9 drones since the Iran War began. They are physical limits caused by industrial capacity and production timelines.

This turns Hormuz into a contest of endurance. In the short term, Iran is structurally better for that kind of fight. Its toolkit is cheap, expendable, and relatively easy to regenerate. In contrast, the American way of war means weapon systems are more capable but are also more expensive and slower to replace. This tactical mismatch is more of an industrial asymmetry problem.

This is why the current debate misses the even bigger problem. The Hormuz closing may look like an energy shock, but it has even bigger industrial ramifications. Political urgency, defense budgets, and deployments can scale quickly. Meanwhile, it is much more time intensive getting the chemistry, materials, and production systems working to mobilize and sustain military readiness.

Infrastructure workarounds may look feasible. Expanding pipeline capacity to the Red Sea or the Gulf of Oman could help redirect flows. Even at full capacity, Saudi Arabia’s East-West pipeline can divert at most 7 million barrels per day to the Red Sea, while the UAE’s Habshan-Fujairah line adds only another 1.5 million. Combined, they cover less than half of the roughly 20 million barrels that normally transit Hormuz each day. These alternate pipeline systems already matter and could carry more volume over time. But they are not a panacea, not to mention that Iran could easily target and disrupt this pipeline infrastructure. Expanding them requires years of construction, financing, and political coordination. They also do not eliminate the underlying vulnerability.

Markets understand this reality better than many policymakers do. Simple economics cause firms to react to risk and fragility. The lesson from the closure of Hormuz is that cooperation cannot substitute for industrial capacity. Advanced economies need the hard power and industrial depth required to deter cheap disruption. That means more missiles, more ships, and a resilient defense industrial base built for sustained competition, not peacetime efficiency.

The Strait of Hormuz has exposed another crack in a fraying American-led global system. The answer cannot be diplomacy alone, poorly conducted diplomacy, or infrastructure dreams deferred. It must be the slower, less glamorous, but more decisive work of rebuilding real industrial endurance and real alliances before the next flicker becomes a prolonged blackout.

ABOUT THE AUTHORS

Jahara Matisek
Senior Research Fellow, Payne Institute and Command Center Director (Joint Operations Center), U.S. Northern Command​

Jahara “FRANKY” Matisek (PhD) is a U.S. Air Force Senior Pilot serving at U.S. Northern Command that is a Fellow at the U.S. Naval War College and Fellow at the Payne Institute for Public Policy. He was previously a professor at the U.S. Air Force Academy and the Naval War College. He has published 2 books and over 130 articles on strategy, warfare, and critical minerals for national security. He has over 3,700 hours of flight time in the C-17, E-11 BACN, T-6, and T-53 and earned a Bronze Star for commanding and directing Kandahar Airfield operations in Afghanistan. As an innovative strategist he has been a Fellow at: AFWERX, Homeland Defense Institute, European Resilience Initiative Center, Irregular Warfare Initiative, Modern War Institute, and William & Mary. Finally, he is a Visiting Scholar at Northwestern University and has been Co-PI on two Department of Defense Minerva grants and a Defense Security Cooperation University research program, being awarded over $1.2 million in research funding.

Morgan Bazilian
Director, Payne Institute and Professor of Public Policy, Colorado School of Mines

Morgan Bazilian is the Director of the Payne Institute and a Professor of public policy at the Colorado School of Mines. Previously, he wD.as lead energy specialist at the World Bank. He has over two decades of experience in the energy sector and is regarded as a leading expert in international affairs, policy and investment. He is a Member of the Council on Foreign Relations.

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