Every time tensions flare in the Strait of Hormuz, the effects ripple across the global economy. Roughly 20 million barrels of oil per day, about one-fifth of global consumption, pass through this narrow corridor between the Persian Gulf and the Arabian Sea. When tanker traffic slows, insurers raise premiums, freight rates spike, and energy prices climb. For import-dependent economies across the Global South, these shifts quickly translate into higher fuel costs, rising food prices, and broader inflationary pressure.
This is not a new vulnerability. But the current disruption is a useful moment to ask why, after decades of awareness, so little has changed structurally, and what it would mean to take that persistence seriously.
The Making of Chokepoints
Part of the answer lies in what Timothy Mitchell, in Carbon Democracy: Political Power in the Age of Oil, calls fossil capitalism. The global energy system was not simply built around oil because it was cheap. It was organized in ways that concentrated political and economic power in specific sites and infrastructures. Control over extraction, transport routes, and chokepoints enabled forms of state power premised on managing, rather than dispersing, these flows.
The result was a system that made Gulf monarchies, long-distance tanker routes, and American naval dominance structurally central. The Strait of Hormuz is as much a product of those historical choices as of physical geography. So is the nearby Bab el-Mandeb strait, which controls access to the Red Sea and through which flows another 10 percent of global oil. The Malacca Strait, meanwhile, controls upwards of 80 percent of oil imports to China, Japan, and other major Asian importers.
Reversing that logic is not a matter of finding alternative suppliers. Even oil sourced from different producers must still pass through the same constrained routes. Strategies such as reshoring or “friend-shoring,” often presented as solutions to supply chain risk, offer limited protection when the vulnerability is geographical rather than diplomatic. The constraint is embedded in the infrastructure of circulation itself.
From Production Shocks to Infrastructure Shocks
The comparison with the COVID-19 disruptions is instructive, but also clarifying in its limits. During the pandemic, the core problem was manufacturing capacity: factory shutdowns, port congestion, and container shortages disrupted production across major hubs in China, Europe, and North America. The Shanghai Containerized Freight Index increased more than fivefold between 2020 and 2021, reflecting the breakdown of logistics coordination at a global scale. In that case, shocks originated in production nodes and propagated through supply chains via missing intermediate inputs.
The Hormuz crisis is structurally different. Manufacturing capacity remains largely intact. What is constrained instead is the energy infrastructure that underpins it.
Energy price shocks transmit rapidly into inflation and output slowdowns across the broader economy, not only through fuel costs but through higher freight rates, insurance premiums, and input costs that affect virtually all sectors simultaneously. If the pandemic exposed the fragility of production networks, Hormuz exposes the fragility of the systems that power them.
Rethinking Supply Chains
Much of the economic literature on globalization has focused on the fragmentation of production across countries. Research by Richard Baldwin and Ian Goldin shows how modern manufacturing is organized through global value chains in which intermediate inputs cross borders multiple times before final assembly, often in ways that embed systemic risk in cost-resiliency trade-offs. Network macroeconomics, including work by Daron Acemoglu and David Baqaee, demonstrates how shocks to upstream industries propagate and amplify across production networks, generating effects that are larger than the initial disturbance.
Yet these frameworks have only partially incorporated the physical infrastructure that sustains these flows. Trade theory since Paul Krugman has long recognized the importance of transport costs and geography, but empirical work has only recently begun to integrate logistics networks directly into models of global value chains. Maritime chokepoints such as the Strait of Hormuz or the Suez Canal function as critical nodes, where disruption can generate cascading effects across otherwise distant sectors.
Recent advances in data make this integration increasingly feasible. Satellite-based vessel tracking through Automatic Identification System data now allows researchers to map shipping flows across specific routes with high precision, as in the work of James Feyrer. At the same time, international input-output datasets such as the World Input-Output Database and the OECD’s Trade in Value Added framework provide detailed information on how industries depend on foreign inputs.
Combining these approaches would make it possible to construct sector-level exposure measures linking industries to particular maritime corridors, and to quantify how disruptions at chokepoints propagate through production systems.
The grounding of the Ever Given in 2021 offered a preview of this logic. A single vessel blocked the Suez Canal, halting hundreds of ships and delaying cargo worth billions of dollars per day. The Hormuz disruption operates on a larger and more sustained scale, but the underlying dynamic is the same: global trade has been optimized for efficiency in ways that concentrate systemic risk in specific corridors. When those corridors are disrupted, the resulting shock is not easily contained.
Unequal Exposure to Global Shocks
The distributional consequences are deeply uneven. As Branko Milanovic argues, the gains from globalization have been distributed asymmetrically, and so are its shocks. Rising energy prices compress real incomes at the lower end while wealthier groups remain relatively insulated. In low-income, import-dependent economies, the effects are especially acute.
In Mozambique, fuel imports account for 21.33 percent of total imports, and transport costs can exceed half the final price of staple foods, so oil price spikes feed rapidly into food inflation. In Nepal, which imports all of its petroleum products, higher crude prices widen an already persistent trade deficit and strain foreign exchange reserves that have at times covered only a few months of imports. With limited fiscal capacity to absorb these shocks, such economies are forced to bear the downstream effects of disruptions generated at distant nodes of the global system.
The asymmetry is not incidental. It reflects how global value chains are structured. Higher-value activities remain concentrated in advanced economies, while lower-income countries are more exposed to input cost volatility and external price shocks. The result is a system in which vulnerability is systematically externalized downward, even as efficiency gains are captured elsewhere.
The Transition and Its New Dependencies
The energy transition offers a longer-term route out of hydrocarbon dependence, but it introduces new vulnerabilities of its own. Clean energy technologies require lithium, copper, and rare earth elements in large and growing quantities. The International Energy Agency projects that demand for these critical minerals could increase several-fold over the coming decades, particularly for battery storage and electrified transport systems. Yet the geography of these resources is highly uneven, and the processing capacity required to refine them is even more concentrated.
Much of that processing is currently located in China, which dominates key stages of the battery supply chain. This raises the possibility that the structure of global vulnerability may shift from hydrocarbon chokepoints to mineral supply chains without fundamentally changing its underlying logic. Dependencies are not eliminated so much as reorganized.
This shift is already reproducing older extractive patterns. The Democratic Republic of the Congo accounts for roughly 70 percent of global cobalt production, much of it extracted under hazardous conditions. Investigations by Amnesty International and Human Rights Watch have documented child labor, exposure to toxic dust, and fatal tunnel collapses in artisanal mines, where thousands of workers operate with minimal protection. Foreign investment, including significant participation by firms linked to China, has expanded this system rather than transforming it. The pattern is familiar: resource extraction integrated into global supply chains, with value captured elsewhere and risk concentrated locally.
Living with Structural Vulnerability
Policy responses often focus on resilience: diversification, strategic reserves, and expanded domestic capacity. These measures are necessary, but they do not resolve the deeper problem. They operate within the same global system that produces vulnerability in the first place, shifting risk rather than eliminating it. Strategic reserves cushion price shocks but do not reduce dependence on imported energy. Diversification redistributes exposure across suppliers and routes. Even efforts to expand domestic capability remain tied to global flows of resources, technology, and finance.
The Hormuz crisis is, in the end, a symptom of a broader structural condition. The networks that make global trade efficient are the same ones that concentrate systemic risk in particular corridors, infrastructures, and resources. Around 90 percent of global trade by volume continues to move by sea, and that dependence is unlikely to decline significantly in the near term, whatever the rhetoric of reshoring might suggest.
The question is not whether to retreat from globalization but how to understand its limits. For much of the Global South, the capacity to build resilience is itself unevenly distributed. Fiscal constraints, technological dependence, and subordinate positions in global value chains limit the ability to construct meaningful buffers. Even where policy space exists, it is often constrained by external debt obligations, currency pressures, and the volatility of capital flows.
What appears, at the level of policy, as resilience often amounts to adaptation to a system that continues to generate vulnerability. The persistence of chokepoints like the Strait of Hormuz is not an accident. It is a feature of how the global economy has been organized. Until that structure is confronted more directly, crises of this kind will remain less an exception than a recurring condition.