Most of the goods Americans buy, and a large share of the oil that powers the world economy, travel by sea. And much of that traffic squeezes through a few narrow passages: straits between continents and canals cut through land. Shipping experts call them chokepoints. When one of them is disrupted, the effects ripple through supply chains thousands of miles away.
The Strait of Hormuz
The Strait of Hormuz connects the Persian Gulf to the open ocean, between Iran and Oman. At its narrowest it is only a few dozen miles wide, and the shipping lanes are narrower still. According to the U.S. Energy Information Administration, about a fifth of the world’s oil consumption passes through it, along with a large share of the world’s liquefied natural gas.
There is no easy alternative route for most of that oil. That is why tensions involving Iran tend to move oil prices quickly: even the threat of disruption makes traders nervous.
The Suez Canal and the Red Sea
The Suez Canal in Egypt links the Mediterranean to the Red Sea, saving ships the long voyage around Africa. It carries a significant share of global trade, especially between Asia and Europe.
To reach it from the south, ships must pass through the Bab el-Mandeb strait at the southern end of the Red Sea. Beginning in late 2023, attacks on merchant ships by Houthi forces in Yemen led many shipping companies to avoid the route and sail around the Cape of Good Hope instead, adding a week or two to voyages and raising costs.
The canal’s vulnerability had already been shown in March 2021, when the giant container ship Ever Given ran aground and blocked it for six days, holding up hundreds of vessels.
The Panama Canal
The Panama Canal, operated by the United States until 1999 and by Panama since, connects the Atlantic and Pacific and is especially important for U.S. trade, carrying goods and energy between the East Coast and Asia. A larger set of locks opened in 2016 to handle bigger ships.
Unlike sea straits, the canal depends on fresh water from a lake system to operate its locks. During a severe drought in 2023 and 2024, the canal authority had to limit the number and size of ships passing through, causing delays and pushing some cargo onto longer routes.
The Strait of Malacca
Between Malaysia, Singapore and Indonesia, the Strait of Malacca links the Indian Ocean to the Pacific. It is one of the busiest shipping lanes in the world and carries much of the oil and goods traveling between the Middle East, Europe and East Asian economies such as China, Japan and South Korea.
How disruptions reach your wallet
When a chokepoint is blocked or becomes dangerous, three things happen:
- Ships take longer routes, using more fuel and time.
- Shipping and insurance costs rise, especially for routes considered risky.
- Delays ripple through supply chains, as factories wait for parts and stores wait for inventory.
Oil and gasoline prices usually respond first, sometimes within hours of a headline. Higher costs for goods tend to follow more slowly, over weeks or months, and are usually smaller, because shipping is only one part of a product’s price.
What we think
The world economy depends on a few narrow waterways that no single country can fully protect, and the past few years have shown that disruptions are not rare events. A drought, an accident or a militia with missiles can each slow trade between continents.
For American consumers, the practical lesson is to read chokepoint headlines as early warnings. Trouble in Hormuz shows up at the gas pump first; trouble in Suez or Panama tends to appear later, in delivery times and prices on store shelves.
