On June 22, 2025, the Iranian parliament reportedly approved a measure to close the Strait of Hormuz — the narrow but vital oil shipping lane that carries over 20% of global oil exports. While the final decision still requires approval from Iran’s Supreme National Security Council and the Supreme Leader, the vote signals how far tensions in the Middle East have escalated.

This move could be a direct response to rising conflict — possibly involving U.S. support for Israel or regional strikes on Iranian interests. If carried out, it would mark one of the most disruptive acts in recent maritime history.
And although the Pacific is geographically distant, Vanuatu would feel the shock almost immediately.

Before the U.S. invasion of Iraq in 2003, the price of oil stayed around 2,750 Vatu per barrel for nearly two decades.

After the invasion, prices rose rapidly, reaching a peak of 12,700 Vatu per barrel by 2007.

This sharp increase contributed indirectly to the 2008 global financial crisis, which impacted many countries — including Vanuatu — through higher transport costs, more expensive imports, and rising fuel prices.

Let’s break down how this decision could shake our shores.

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1. Fuel Prices Will Spike

Vanuatu imports all its fuel — petrol, diesel, and aviation fuel. These shipments often originate from refineries in Asia that rely heavily on crude oil passing through the Strait of Hormuz.

If that route is blocked:

• Oil prices will skyrocket globally
• Vanuatu’s fuel suppliers (like Australia, Singapore) will pay more
• That cost will pass directly to consumers

Result: Expect higher petrol prices, expensive electricity, and rising transport fares.

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2. Shipping Costs and Import Delays

Hormuz isn’t just about oil — it’s about global freight routes. A closure causes:

• Rerouted cargo vessels
• Higher insurance premiums
• Congestion at alternate ports

Even though Vanuatu lies far from the Middle East, our imports travel global routes. A logjam anywhere creates rising costs and slower shipments.

That means: Costlier imported food, construction materials, and medicine.

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3. Inflation Will Hit the Islands

When fuel and freight costs rise, so does everything else. This shock will cause:

• Inflation in food prices
• Strain on household budgets
• Difficulty in maintaining government subsidies and services

For a country still recovering from cyclones, droughts, and global market shifts, this adds yet another layer of stress.

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4. Currency and Aid Pressure

Vanuatu’s currency, the vatu, could weaken as the US dollar surges during global crises. That would make imports even more expensive.

Worse, foreign aid and donor funding may be delayed or redirected, especially if bigger economies turn inward to manage their own energy and security crises.

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Final Thoughts: A Global Crisis Can Hit Even the Smallest Nations

The Strait of Hormuz might be a world away, but when Iran closes it, the shockwaves ripple across oceans. For Vanuatu, the consequences are immediate and painful — not just for government planners, but for every household struggling to afford fuel, food, and transport.

This crisis reminds us: Global stability is not just a foreign affairs issue — it’s a family budget issue, a shipping issue, a price-at-the-pump issue.

Stay informed. Stay prepared.