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This is how Strait of Hormuz shock is forcing a global trade reset

The current Iran war has laid bare a fundamental reality: 20 per cent of global energy trade cannot afford to rely on a single artery, no matter how resilient and cost-effective.

People need to control their own destinies, with their friends,” said Yossi Abu, CEO of the Israeli company NewMed Energy. He was asked about the ‘weaponised’ Hormuz, onto which an outsized share of global economic stability currently hangs.

Evocative how geopolitics and geoeconomics collide— more so during polycrises. While no one can picture what exactly is to come and when, one can make a reasonable argument about how the strategic contours will appear and what they will address. Amidst all uncertainty, GCC will certainly spend the next few years exploring everything that can free them from their current strategic enslavement to the Hormuz.

This narrow chokepoint and its “weaponisation”—whether through direct disruption, threats of mining, toll booth fees, or simply the uncertainty it perpetuates into markets—has sent shockwaves across global supply chains. Prices continue to remain spiked, not because of shortages, but because of fear and supply disruptions. Alongside come other costs—rising insurance premiums, thinning strategic reserves and very soon, perhaps even reduced demand.

Ergo, crises of this magnitude often do more than disrupt; they force a strategic reset.

Present events are triggering a familiar rethink—a shift not just in routes, but in the very architecture of connectivity between Asia, the Middle East, and Europe. In that sense, the current turmoil may have revived a project many had already written off: the India–Middle East–Europe Economic Corridor (IMEC).

But not in its original form.

When IMEC was first announced with much fanfare at the G20 summit in New Delhi on 9 September 2023, it was framed as a timely, integrative, inclusive vision. Backed by the G-7 and supported by key Gulf states, it promised to connect India to Europe via the Middle East—linking ports on the west coast of India to the UAE, to overland routes through Saudi Arabia, onward to Israel’s Haifa port, and then to Europe, entering the continent via Piraeus in Greece.

The logic was reasonable. It aimed to create alternative trade routes, reduce dependency on traditional chokepoints like the Suez Canal and build economic and infrastructural interdependence among “like-minded” partners. It also drew on the broader political momentum generated by the 2020 Abraham Accords, which sought to normalise relations between Israel and several Arab states, beginning with the UAE.

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