By: Faris Al Hadidi
Economist and banker
Jordan Daily - For decades, the strategic importance of the Middle East’s waterways has been discussed mainly in geopolitical and military terms. The Strait of Hormuz, Bab el-Mandeb and the Suez Canal have traditionally been viewed as security corridors whose protection was essential to the movement of oil, gas and international trade.
But the events of recent years have exposed a more fundamental reality: these waterways are not simply geopolitical assets. They are economic infrastructure.
When a ship changes its route because of security concerns, the consequences do not remain at sea. They appear in oil prices, freight rates, insurance premiums, food prices, inflation, tourism, fiscal revenues, foreign-exchange requirements and ultimately household purchasing power.
According to this fact, we need to think about its straits differently. Maritime chokepoints should no longer be treated only as security issues. They should become part of economic policy, supply-chain policy and national resilience strategies.
The Strait of Hormuz shows the scale of the challenge. In the first half of 2025, around 20.9 million barrels per day of oil moved through the strait, equivalent to roughly one-fifth of global petroleum liquids consumption and about one-quarter of global seaborne oil trade. Around one-fifth of global LNG trade also passed through Hormuz in 2024, much of it originating from Qatar and destined for Asian markets.
This makes Hormuz more than a narrow waterway between Iran and Oman. It is one of the arteries of the global economy.
The economic weakness does not stop at Hormuz. Further west, Bab el-Mandeb connects the Red Sea with the Gulf of Aden and provides the maritime gateway to the Suez Canal. When shipping through Bab el-Mandeb becomes risky, vessels travelling between Asia and Europe can be forced to travel around the Cape of Good Hope.
That decision can add days to a journey, increase fuel consumption, raise insurance and financing costs, and reduce the effective capacity of the global shipping fleet.
The numbers show how quickly geography can become economics. UN Trade and Development reported that by May 2025, tonnage passing through the Suez Canal remained around 70% below 2023 levels. At the same time, global shipping distances had increased substantially as vessels were rerouted around disrupted corridors.
For Egypt, this is directly reflected in the revenues of the Suez Canal. For Gulf exporters, it affects the cost and reliability of energy shipments. For European manufacturers, it affects delivery times and inventories. For Asian economies, it affects access to energy. And for countries such as Jordan, the consequences can appear through a less visible channel: the cost of imports.
This is why the Middle East should begin thinking about what might be called a “Straits Policy”.
Such a policy would not mean controlling or politicizing international waterways. Rather, it would mean recognizing that dependence on a limited number of maritime corridors creates an economic vulnerability that governments and businesses must actively manage.
Energy exporters have already begun building alternatives to Hormuz. Saudi Arabia and the United Arab Emirates, for example, have pipeline infrastructure that can bypass part of the strait. EIA estimates that the Saudi East-West pipeline and the UAE’s Abu Dhabi pipeline together provide around 4.7 million barrels per day of potential bypass capacity, but diversification should go beyond pipelines.
Ports, railways, roads, storage facilities, logistics zones and cross-border infrastructure can create alternative corridors when maritime routes become unreliable. This is particularly important for the GCC countries, which have the financial resources to invest in multimodal transport networks linking the Arabian Gulf to the Red Sea and the Mediterranean.
The traditional economic approach has focused on efficiency: minimize inventories, reduce transportation costs and rely on global supply chains. But the recent disruptions have demonstrated the limits of that model, the cheapest supply chain is not necessarily the safest supply chain.
Governments and large corporations may therefore need to reconsider strategic stocks of energy, food, industrial inputs and other essential goods. The objective is not to eliminate market efficiency, but to create a buffer against temporary disruptions.
A disruption to maritime trade can generate a simultaneous increase in freight costs, commodity prices and foreign-exchange requirements. For countries that import energy and food, this can create pressure on both inflation and the current account.
A severe shipping shock should be treated in much the same way as other macroeconomic shocks. What happens to inflation if freight costs double? What happens to the current account if the price of oil rises sharply? How much additional foreign currency would importers require? What happens to tourism if regional air and maritime connectivity deteriorates?
The IMF has warned that disruptions to transport corridors can continue to affect economic growth even after the immediate conflict has ended. Shipping disruptions raise transportation costs, weaken supply chains and negatively affect economies that are highly dependent on imports or tourism.
Jordan does not control any of the major regional maritime chokepoints, but its economy is connected to all of them through trade, energy, logistics and tourism.
Jordan’s economic resilience depends partly on developments outside its borders. Any prolonged disruption in the Gulf or Red Sea can affect the price and availability of imported energy and commodities, shipping costs and the competitiveness of Jordanian exporters.
This creates an opportunity for Jordan to strengthen its position not simply as a consumer of regional logistics services, but as a potential land bridge.
The development of Aqaba, combined with road and rail connectivity toward neighboring markets, could give Jordan greater strategic importance in a region searching for alternative routes. The objective should not be to replace the Suez Canal or compete directly with major Gulf logistics hubs. Rather, Jordan could position itself as one component of a more diversified regional supply-chain network.
The globalization was built around the assumption that goods would move through the most efficient route at the lowest possible cost. The new environment is different. Security risks, geopolitical fragmentation, climate events and strategic competition are making resilience almost as important as efficiency.
The Middle East has traditionally viewed its geography as a source of strategic power. The next step is to transform that geography into economic resilience.
Hormuz, Bab el-Mandeb and Suez should not be considered three separate problems. They are parts of one interconnected economic system stretching from the Gulf to the Red Sea and onward to Europe and Asia.
The region cannot eliminate geopolitical risk. Nor can it guarantee that every maritime corridor will remain open under every circumstance.
That requires alternative infrastructure, diversified supply chains, strategic inventories, stronger regional cooperation and financial stress-testing. It also requires governments and businesses to recognize that the security of trade routes is now an economic variable in its own right.
The Middle East has spent decades benefiting from its location at the centre of global energy and trade flows.
The challenge for the coming decade is to make that location an economic strength rather than an economic vulnerability.
The future of Middle Eastern economic policy may therefore depend not only on what happens inside the region’s economies, but also on what happens in the narrow waterways through which the global economy reaches them.
