Bounded by Iran to the north and Oman and the United Arab Emirates to the south, the strait is about 50km wide at its entrance and exit, narrowing to roughly 33km at its tightest point.
Despite that, the strait, named after a tiny island that sits between the oil-rich Persian Gulf and the Gulf of Oman, acts as a vital gateway to international markets.
FMT takes a closer look at why the strait matters and what disruptions have meant so far for global trade and Malaysia.
Who uses the Strait of Hormuz, and why?
Estimates from the US Energy Information Administration show that about 20 million barrels of oil and refined products passed through the strait daily last year, accounting for an annual trade value nearing US$600 billion.
The waterway also carries about 20% of the liquefied natural gas supply, much of it from Qatar.
It is a key export route for major producers such as Saudi Arabia, Iran and Iraq, with most shipments heading to Asian markets including China, Japan and India.
Beyond energy, the strait facilitates the shipment of fertilisers, helium and petrochemical materials, while also acting as a key import route into the region for food, medicines and technology.
Rising tensions, restricted access
Since the US and Israel launched strikes on Iran on Feb 28, daily ship traffic has fallen sharply—from about 130 vessels per day to a mere 90 for the entire month, according to maritime tracking data.
However, since March 25, Tehran has permitted safe passage for “non-hostile” vessels that coordinate with its authorities.
Benjamin Barton, head of the school of politics, international relations and economics at the University of Nottingham Malaysia, said the situation does not amount to a complete shutdown.
He said some oil and gas shipments, particularly those linked to countries maintaining trade ties with Iran, are still being allowed through, though under heightened risk.
According to media reports, at least 18 merchant vessels have been attacked in or near the Strait of Hormuz and the wider Persian Gulf region since late February.
Impact of global oil prices
The International Energy Agency has described the situation as one of the most severe supply shocks in recent history, driven partly by reduced traffic through the strait.
Despite a coordinated release of 400 million barrels by 32 countries from strategic reserves, global oil prices have remained elevated, with Brent crude hovering at around US$100 a barrel — about US$30 higher than pre-conflict levels.
Barton said the impact is already being felt across economies, extending beyond fuel prices.
Higher energy costs, he said, are likely to filter through supply chains, affecting everything from manufacturing to essential goods.
Shipping and insurance costs have also risen as vessels face increased risks navigating the region, with these additional costs often passed on to consumers.
“If output from key producers is disrupted, that has a much larger effect on global supply than the strait alone,” he said.
The impact on Malaysia so far
Prime Minister Anwar Ibrahim said, following a review with Petronas, that the country has enough petroleum to last until May 2026. However, local fuel prices, particularly RON97, unsubsidised RON95 and diesel, have risen sharply.
To soften the blow for Malaysians, the Madani government is keeping subsidised fuel prices at RM1.99 per litre for RON95, with East Malaysia also enjoying subsidised diesel at RM2.15 per litre.
According to second finance minister Amir Hamzah Azizan, this has come at a significant cost to the government, with Putrajaya’s monthly subsidy bill shooting up to RM3.2 billion, from RM700 million previously.
Higher energy costs are also hitting businesses. Pos Malaysia has imposed a fuel surcharge of between 15% and 40% since March 18, with weekly revisions. Malaysia Airlines, Firefly, and Batik Air have introduced similar surcharges.
With global maritime traffic disrupted, Malaysian exports in multiple industries have suffered shipment delays, necessitating their rerouting. Rising fuel prices have also driven up logistics costs, further increasing operational expenditure.
Over the last month, Malaysia, like the rest of the world, has found itself grappling with higher subsidies, rising business costs, and disruptions to day-to-day living.
The government has moved to shield consumers as best as it can, but prolonged instability in West Asia is expected to strain the national economy even further.
Belt-tightening, both at the fiscal and household level, now appears unavoidable as the country navigates one of the most severe supply disruptions in recent history.