The Strait of Hormuz has become one of the central economic flashpoints of the current US-Israeli conflict with Iran. The narrow waterway between Iran and Oman normally carries roughly one-fifth to one-quarter of global seaborne oil trade, as well as major volumes of LNG, making it critical to Asian energy supplies.
Control over the strait
Since the war began, Iran has restricted shipping and asserted control over the strait, while the US has deployed naval forces and threatened a prolonged blockade.
Traffic has fallen sharply, with Citrinowicz noting that only a “few dozen” commodity vessels have recently been crossing each day, compared with hundreds before the conflict.
“The Iranians have the basic interest of opening the Straits. The problem is that they want to do that while controlling the Straits themselves. So even if we have [a peace] agreement tomorrow, it will take time to sit back and forth in that regard,” he said.
The conflict’s escalation has presented significant complications for the Philippine economy, with the country relying on oil imports that pass through the Strait of Hormuz for 99 percent of its supply.
Headline inflation remains nearly 7 percent higher than a year ago despite easing for three consecutive months, while the declaration of a national energy emergency has compounded the ongoing slump in infrastructure spending, resulting in second-quarter gross domestic product growth of 2.3 percent — the fourth consecutive quarter of decline.
In June, Iran and the US were on the verge of a peace deal, with easing tensions in the preceding month allowing for significant rollbacks in Philippine fuel prices. The deal, which was scheduled to be signed in Switzerland in mid-June, quickly collapsed, with domestic pump prices now once again approaching triple-digit levels per liter.
‘Economic nuclear bomb’
Citrinowicz, who served for 25 years in various command positions in Israel’s Defense Intelligence, including as head of the Iran branch in the Research and Analysis Division, said the Iranians now understand the leverage that comes with controlling the Strait of Hormuz, referring to it as their “economic nuclear bomb.”
He noted that, amid mounting pressure from the global economy, the strait will eventually be reopened, albeit subject to Iran’s control and conditions, with countries such as the Philippines potentially reaching out to Iran directly to insulate themselves from further oil supply disruptions.
BMI, a unit of Fitch Solutions, as well as the Asian Development Bank, have noted that the Philippines has been one of the hardest-hit nations in the world by the energy crisis due to its heavy reliance on oil imports.
BMI slashed its Philippine gross domestic product growth forecast for the year to 3.9 percent, a downgrade of around 1.3 percentage points. This marked BMI’s largest downward revision for any economy outside the Middle East.
The firm also raised its 2026 headline inflation forecast for the Philippines to 6.1 percent, up by 3 percentage points and the second-largest upward revision among its global forecasts related to the energy shock, trailing only Egypt.
“Even worse than that, the insurance companies won’t rush to send tankers to the Straits until they know that there’s not going to be [a] renewal of the war. So even if on a positive note, it will take time until you’ll see the flow of gas [and] oil,” said Citrinowicz.
