The strategic significance of the Strait of Hormuz, long considered a critical chokepoint for global oil shipments, is diminishing amid shifting geopolitical and energy dynamics, according to Thomas O’Donnell, an American energy and geopolitics strategist and Global Fellow at the Wilson Center. In an interview on Thursday, O’Donnell argued that Iran’s leverage over the waterway is weakening both because alternative oil routes are becoming more viable and due to Tehran’s reduced capacity to project military power in the region.
The Strait of Hormuz has historically been vital, with approximately 14 to 15 million barrels of oil transported daily before last year’s 12 Day War, a conflict that delayed Iran’s nuclear ambitions and degraded many of its regional proxies. Iran has since relied predominantly on its ability to threaten the strait with rockets and drones as a deterrent against regime change or external intervention. However, O’Donnell emphasized that this “trump card” is losing much of its influence.
One factor undermining Hormuz’s importance is the development of alternative pipelines. Saudi Arabia’s East-West Crude Oil Pipeline and the United Arab Emirates’ pipelines move substantial volumes that bypass the strait—approximately five million barrels per day and 1.5 to 1.8 million barrels per day, respectively. Additionally, Iraq’s plans for an oil pipeline to Syria could further reduce dependence on Hormuz. These alternatives, along with the release of over 400 million barrels of petroleum products by International Energy Agency member nations and 172 million barrels from the United States’ Strategic Petroleum Reserve, have diversified global oil supply sources.
U.S. Treasury Secretary Scott Bessent recently predicted that within two years, 50 to 70 percent of the exports currently passing through Hormuz could be rerouted through underground pipelines, a shift that could lessen regional tensions. O’Donnell noted that Iran-backed militias in Iraq might threaten such projects, adding urgency for Iraq to meet disarmament deadlines aimed at reducing these groups’ influence.
Moreover, O’Donnell pointed out that Iran’s military capabilities in the area have deteriorated. Systematic U.S. military actions have targeted Iranian radar and surveillance infrastructure, forcing oil tankers to transit under cover of darkness to avoid detection. Iran’s missile and drone arsenals, once regarded as robust, face challenges in replenishment and technological advancement, further eroding Tehran’s ability to assert control over the strait.
The diminishing strategic value of Hormuz unfolds amid broader regional tensions. Prior to last year’s conflict, Gulf Arab states were reportedly aware of Iran’s plans to pressure the United States by targeting them should hostilities escalate. Despite dissatisfaction with U.S. military actions against Iran, Gulf states are unlikely to tolerate continued Iranian dominance over Hormuz, partly due to their own interests in maintaining control over regional shipping lanes.
O’Donnell suggested that Gulf states prefer a negotiated resolution, given the long-term economic pressures facing Iran and the evolving regional energy landscape. He warned, however, that Iran might intensify pressure through attacks on Gulf states or potentially launch a ground incursion as a desperate measure to sustain leverage. Ultimately, he predicted that Iran would face a diminishing role in the region’s energy and security equation, while alternative oil routes and degraded Iranian defenses would lead to increased stability and unimpeded passage through the Strait of Hormuz over time.