Market Update: We break down the business implications, market impact, and expert insights related to Market Update: Why US still needs Strait of Hormuz for sake of global economy – Full Analysis.
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US President Donald Trump this week said his country does not need the Strait of Hormuz. Is he right?
Analysts say that while the US is a net energy exporter and it is not reliant on oil imports through the vital strait, it is still tied to the global economy and will probably feel the inflationary headwinds and pain suffered by other nations.
“The US is far less directly exposed to Hormuz than Asian and some European importers because its domestic shale output has already cut Gulf dependence sharply,” Maryam Salman, a principal consultant at Dubai-based Qamar Energy, told The National.
“So what Mr Trump is making is a ‘relative-exposure argument,’” she said. The world’s biggest economy is “much less vulnerable than countries like China, India, Japan, South Korea, or [in] Europe” but it still is vulnerable in relative terms.
“Yes, the US may withstand the disruption better than most – in the very near-term – but it cannot economically insulate itself from the disruption,” Ms Salman added.
Trump’s ‘hollow’ logic
Mr Trump said the US imports “almost no oil” through the Strait of Hormuz and “won’t be taking any in the future” – but numbers indicate otherwise.
The US Energy Information Administration (EIA) estimates imports from the Gulf make up about 7 per cent of all crude coming into America – not a big number, especially compared to import-dependent countries in Asia, but “not nothing”.
“Mr Trump’s logic is political first, energy-economic second … what he’s really saying is that the US no longer sees itself as the primary economic ‘hostage’ of Hormuz,” Ms Salman said.
Iran has effectively closed the strait, through which a fifth of the world’s oil usually passes, to all but a few vessels, only allowing certain countries “friendly” to the Iranian regime to use it.
That leads to a critical point: Mr Trump may claim the US has no interest in the strait but the disruption there not only affects other countries but also America – heavily reflected in soaring petrol prices, which Washington has framed as short-term pain.
The President’s logic is “hollow”, as the US regional alliance security depends entirely on the reliability of Middle Eastern oil supplies to the global market”, said Francesco Sassi, a postdoctoral fellow at the University of Oslo in Norway.
‘False’
US crude oil production increased by about 3 per cent, or around 350,000 barrels per day, in 2025, setting a new annual production record of 13.6 million bpd, the EIA’s Short-Term Energy Outlook report showed this week.
And while the number of active rigs per month was 5 per cent less than in 2024 and 1 per cent fewer wells were drilled, efficiency improvements helped US production to grow, the Washington-based agency said.
In his televised address, the President claimed the US has ample oil, is “totally independent” and does not require Middle East crude. He even told his Nato allies, who have refused to join US-Israel war on Iran, to use their own military might to ensure the Hormuz pass reopens for shipping.
“False. As you can see, the oil prices [in the US] are currently above $4 per gallon,” Mr Sassi said. The last time US petrol prices were at this level was in 2022, shortly after Russia began its full-scale invasion of Ukraine.
The expansion of US domestic oil and gas production tipped the balance in favour of the US, as it is relatively less sensitive to global energy price movements.
The country has maintained a focus on preventing economic shocks that can spread through financial markets and its partner economies, said Irina Tsukerman, a geopolitical analyst in New York.
Hormuz, however, “retained importance because disruptions there could still influence inflation pressure, investor sentiment and political stability through global reactions”, she told The National.
Domino effect
The Strait of Hormuz is relatively small – with its narrowest point at about 54km – but the consequences of its closure are profound.
The brunt of the conflict is already being felt by consumers and businesses, with investors becoming increasingly wary.
The situation has introduced a new layer of uncertainty that has reverberated across several asset classes and its impact on different stakeholders varying, Ms Salman said.
“The perception that the US may be less willing to act as a primary guarantor of free passage will add a persistent geopolitical risk premium, even when physical flows partially resume,” she said.
A serious disruption in Hormuz cannot remain a regional matter: it would influence production cycles in Asia, economic sentiment in Europe and shipping patterns across the global economy, analysts say.
“For investor sentiment, the effect is mixed – on one hand, it seems to be supportive for US energy equities and export-linked infrastructure, but on the other, it is understandably creating caution across shipping, refining, energy-intensive sectors, where uncertainty is delaying investment decisions,” Ms Salman said.
US interest in the strait today reflects a long evolution from concerns about physical supply to maintaining stability within a highly interconnected global economy, Ms Tsukerman said.
“The continued movement of energy through that corridor supports steady expectations about pricing, partner stability, and the functioning of trade networks that continue to shape American prosperity and influence.”