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Iran Holds Global Economy Hostage Via Strait of Hormuz, Expert Warns

Crisis Group expert Ali Vaez states Iran believes it holds strategic leverage by threatening to close the vital Strait of Hormuz, holding the global economy hostage. He warns Iran could escalate further by targeting critical Gulf infrastructure and is undeterred by US threats. The US administration is hesitating on military action due to deep market concerns over the consequences of a wider war. The conflict has already caused long-term damage, with 17% of Qatar's gas production capacity lost, taking years to recover.

Key Points: Iran's Strait of Hormuz Threat: Global Economy Held Hostage

  • Iran threatens Strait of Hormuz closure
  • Risks catastrophic regional escalation
  • US hesitates over market stability
  • Long-term energy production damage already seen
3 min read

Iranians believe they have "upper hand" by holding global economy hostage through Strait of Hormuz: Crisis Group's Ali Vaez

Crisis Group expert Ali Vaez warns Iran believes it has the upper hand by threatening the Strait of Hormuz, risking global market turmoil and wider war.

"The Iranians believe they have the upper hand by holding the global economy hostage - Ali Vaez"

Istanbul, March 27

As tensions in West Asia reach a critical juncture, Ali Vaez, the Iran Project Director and Senior Adviser to the President at the Crisis Group, has provided a stark assessment of the current military and diplomatic deadlock. The situation remains volatile as Washington signals a desire for talks while Tehran continues to maintain a defiant stance.

In an interview with ANI, Vaez highlighted the strategic leverage Iran believes it holds over the international community.

"The Iranians believe they have the upper hand by holding the global economy hostage through the potential closure of the Strait of Hormuz, creating a situation without an easy solution for President Trump. If he escalates, they could kill more Americans and involve the Houthis in Yemen to close the Bab al-Mandab, cutting access to the Red Sea. Such moves would send markets into turmoil," he explained.

The potential for a wider regional catastrophe remains a primary concern, with Tehran showing a willingness to expand the scope of its targets.

Vaez warned that "Iran may escalate further by targeting critical Gulf infrastructure such as desalination plants." He further noted that the Iranian leadership is "not deterred by President Trump's threats and believes they can outlast the US and Israel."

Underscoring the lack of progress toward peace, Vaez pointed out that "one month into the conflict, they continue launching missiles and drones, showing no interest in a diplomatic solution."

This ongoing aggression persists despite the severe economic risks associated with a direct military confrontation between the two powers.

Discussing the rationale behind the current pause in US military action, Vaez suggested that economic stability is a major factor in the White House's deliberations.

"I think the President has been hesitating because he understands that markets are deeply concerned about the consequences of further escalation in this conflict," he stated.

The expert noted that the threats exchanged between the nations have created a "nightmare scenario" for the world.

President Trump "had threatened to destroy Iran's energy infrastructure and electrical grid, while Iran warned it would retaliate by targeting energy facilities in Gulf states and attacking Israel's grid."

According to Vaez, such an escalation "would not just cause a temporary dip in exports but a serious reduction in production for months or even years."

The devastating impact of the conflict is already evident in the region's energy output.

"Already, 17% of Qatar's natural gas production capacity has been lost, with recovery expected to take three to five years," Vaez highlighted, pointing to the long-term damage already inflicted on global supply.

- ANI

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Reader Comments

S
Sarah B
The analysis is spot on. The US hesitation is purely economic. A full-blown conflict would send oil prices skyrocketing and trigger a global recession. India would be hit very hard. Our government needs to engage with all parties quietly and push for de-escalation. National interest comes first.
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Vikram M
Honestly, both sides are to blame. The US's maximum pressure policy pushed Iran into a corner, and now they are lashing out. But targeting desalination plants? That's crossing a red line and harming ordinary civilians. The world needs a mediator, maybe a country like India can step in?
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Priya S
The loss of 17% of Qatar's gas capacity for 3-5 years is staggering! 🇮🇳 This directly impacts LNG imports and prices. Our long-term energy security planning needs to factor in this permanent instability in the Gulf. Time to fast-track renewables and other sources. Jai Hind!
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Rohit P
With all due respect to the expert, I feel this narrative overstates Iran's "upper hand." The moment they actually close the Strait, they invite a devastating response. It's a bluff. Their economy is in shambles. They need a deal more than anyone. The stalemate is hurting everyone, especially developing economies like ours.
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Michael C
Living in Mumbai, I see the direct link between Gulf tensions and petrol prices. Every threat sends a ripple through our markets. This isn't just a distant geopolitical issue; it's about the monthly household budget for millions of Indians. Stability is not a luxury, it's a necessity.

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