Strategy insights: Hormuz shows the power of asking 'What if?'

For years, Clem Sunter and Chantell Ilbury asked a deceptively simple question about one of the world’s most important energy arteries: What if the Strait of Hormuz stopped working?

In early 2026, that question ceased to be hypothetical as conflict brought tanker movements through the strait close to a halt. That is what pressure does to strategy: strip away the confidence created by normal conditions and exposes the assumptions beneath the plan.

In 2025, almost 20 million barrels per day of crude oil and petroleum products passed through Hormuz. That represented about a quarter of the world’s seaborne oil trade, with approximately 80% destined for Asia. Those figures are striking, but the most strategically important question concerns what happens when that enormous concentration of trade can no longer move as expected.

Strategy looks strongest when nothing is going wrong. Supply chains operate, markets remain accessible, infrastructure functions and alliances hold, allowing their underlying assumptions to become almost invisible. When one of those assumptions fails, however, the true strength of the strategy is revealed by how effectively it adapts under pressure.

Efficiency is not resilience

For decades, geography gave Gulf producers an extraordinarily efficient export system. They could produce hydrocarbons around the Gulf, load them onto ships and move them through Hormuz to markets around the world. Iran, Iraq, Kuwait, Qatar and Bahrain consequently depend on the strait for the vast majority of their oil exports.

Saudi Arabia and the United Arab Emirates stand apart because they have developed infrastructure capable of bypassing Hormuz. Saudi Arabia’s East-West Pipeline carries crude across the country to Yanbu on the Red Sea, while the UAE’s Abu Dhabi Crude Oil Pipeline connects the Habshan collection facilities with Fujairah on the Gulf of Oman. The Fujairah route, which sits outside Hormuz, can carry approximately 1.8 million barrels per day.

At first glance, these pipelines appear to provide exactly the contingency that sound strategy demands. If Hormuz becomes unavailable, build another route. The International Energy Agency estimates that the two routes provide only about 3.5 million to 5.5 million barrels per day of available capacity for redirecting crude oil—and notes that sustainable operation at the upper end of that range has not been fully tested.

Strategy also cannot stop after answering the first “what if?” The next question must test the proposed solution: What if the alternative route becomes vulnerable too? Saudi Arabia’s pipeline ends at Yanbu on the Red Sea. Cargoes subsequently sent south towards Asian markets would face the risks surrounding Bab el-Mandeb—or have to take the much longer route around Africa—so avoiding one chokepoint can create exposure to another.

Hormuz, therefore, cannot be understood as an isolated vulnerability. Pipelines, ports, refineries, liquefied natural gas terminals and maritime routes form an interconnected strategic system. The real question is not simply whether Hormuz can be bypassed, but how many genuinely independent ways exist to move energy from where it is produced to where it is needed.

Redundancy must be genuinely independent

This distinction matters far beyond energy. An organization may believe it has redundancy because it uses two suppliers, but both may depend on the same port, electricity grid, cloud platform, financing source or transport corridor. What appears to be diversification may still contain a single point of failure.

The Middle Eastern energy system demonstrates the same principle on a geopolitical scale. A second route provides limited protection if it shares critical dependencies with the first or creates new vulnerabilities elsewhere in the network. Redundancy becomes strategically valuable only when the alternatives are sufficiently independent to withstand the same disruption.

Oil is also only part of the Hormuz story. About 93% of Qatar’s liquefied natural gas exports and 96% of the UAE’s LNG exports normally pass through the strait, together accounting for approximately 19% of global LNG trade. Unlike crude oil, those volumes cannot currently be redirected through an alternative export route at a comparable scale.

Hormuz is therefore not merely an oil chokepoint. It sits inside a much larger system involving oil and gas production, pipelines, ports, refineries, shipping lanes, electricity generation, Asian energy security and global economic activity. A disruption at one narrow maritime passage can transmit pressure through every part of that network.

Asking “what if?” is sometimes dismissed as pessimism or confined to the field of risk management. That distinction is a mistake because strategy ultimately requires choices under uncertainty. Asking the question reveals the assumptions embedded in those choices and tests whether the available alternatives would survive the same pressure.

The first “what if?” identifies the obvious vulnerability, while the second tests the contingency designed to address it. The third asks what happens when supposedly independent risks occur simultaneously or when infrastructure regarded as an asset becomes a liability. Continue the process and the wider system, including its hidden concentrations and dependencies, begins to emerge.

Strategy preserves options

Clem Sunter and I examine this discipline of questioning assumptions in Socrates & the Fox: A Strategic Dialogue. Assumptions do not remain valid simply because they have served us well in the past. At some point, conditions change, and a strategy built around an untested assumption can become dangerously brittle.

Concentration often looks like optimization while conditions remain benign. One supplier costs less, one export corridor moves goods more efficiently, one technology platform simplifies operations and one market produces the strongest returns. When the assumption supporting that concentration fails, yesterday’s efficiency becomes today’s dependency.

Good strategy cannot merely optimize for the world we expect. It must retain options for worlds we do not expect, even when those options appear inefficient during normal times. Spare capacity, alternative suppliers, duplicate infrastructure, inventories, distributed capabilities and relationships without an immediate return all impose costs, but under pressure they become strategic optionality.

The disruption at Hormuz encourages us to look at the map differently. To the west lie Saudi Arabia’s pipeline network, Yanbu and the Red Sea; to the south lie Bab el-Mandeb, the Gulf of Aden and the longer route around Africa; and to the east lie Fujairah and the Indian Ocean. Add LNG and the vulnerability extends further still, reaching the Asian economies that consume most of the energy moving through these routes.

What initially appears to be a narrow maritime problem is, in fact, a network problem. The strategically important question is rarely whether one node can fail because experience tells us that it can. The question is whether the system can continue functioning after it does.

That is the lesson Hormuz lays bare.

Strategy is easiest to admire when everything works, but its real strength emerges when assumptions fail, contingencies come under pressure and hidden dependencies become visible. That is why two simple words belong at the center of strategic thinking: What if?