It is interesting to reflect on the difference between the 2003 Gulf War and the current Iran war on the impact of oil flow through the Strait of Hormuz and the potential impact on share markets.
The Strait of Hormuz has long been one of the most important chokepoints in the global energy system. Sitting between the Persian Gulf and the Gulf of Oman, it acts as the narrow maritime gateway for oil exports from the Middle East to the rest of the world. For decades, the flow of oil through this passage has shaped global energy prices and influenced the behaviour of financial markets, particularly in Asia and the West. The way those markets react today is very different from how they responded in the early 2003.
Western economies were far more sensitive to disruptions in Middle Eastern oil exports. In 2003, around 14M barrels of oil per day passed through the Strait of Hormuz. This was 40% of the World’s oil demand. Most of this went to the US and Europe.
Western share markets tend to respond sharply to large increases in oil price prices. Higher oil prices translate into rising costs for transport, manufacturing, and consumer goods. Companies in sectors such as airlines, logistics, and heavy industry were particularly exposed in 2003. Equity markets often fell when geopolitical tensions threatened the Strait of Hormuz because investors expected higher energy costs to slow economic growth and compress corporate margins.
Asian markets in 2003 were affected as well, but the scale of their dependence on Middle Eastern oil was not as high as it is today. China’s economy was growing rapidly, but had not yet become the world’s largest importer of crude. India’s energy demand was expanding, but remained smaller relative to developed economies. Japan and South Korea relied heavily on Middle Eastern oil, yet their overall share of global demand was smaller compared with Asia’s position two decades later.
Over the past twenty years the geography of global oil demand has changed dramatically. In 2025 only around 20% of the world’s oil consumption passed through the Strait of Hormuz, around 20M barrels per day. Of this 85% went to Asia, with China, India, Japan, and South Korea accounting for the majority of this demand. Asian share markets are now far more exposed to disruptions in Gulf oil exports than they were in the early 2003. If tensions in the region threaten tanker traffic or push crude prices sharply higher, the impact on Asian corporate costs and economic growth expectations can be immediate.
This does not mean that Western markets are immune to disruptions. Oil remains a globally traded commodity, and price spikes caused by geopolitical tensions can ripple through all economies. Higher crude prices can raise transportation costs, increase inflation, and influence central bank policy in both Europe and North America.
Another important difference between 2003 and today is the scale of financial market integration. Two decades ago, emerging Asian markets were less deeply connected to global capital flows. Today they represent a much larger share of global equity indices and attract substantial international investment. Because of this, shocks affecting Asian energy security can now transmit quickly into global equity sentiment. A disruption in oil flows through the Strait of Hormuz could therefore have a larger effect on Asian equity indices, which in turn can influence investor behaviour in Western markets.