In August Taiwan deliberately slowed down its own mobile internet, and the rest of the year has been busy proving it right.
The civil defence exercises of 5 to 14 August throttled bandwidth on purpose in two thirty-minute windows, to test what the island’s communications would feel like under blockade. The defence ministry rehearsed relocating the Armaments Bureau’s 202nd Arsenal and converting civilian factories to military assembly, and the navy and coast guard ran the island’s first joint anti-blockade escort drill. Taipei had been explicit since April, when a senior official cited Iran’s closure of the Strait of Hormuz as the demonstrated risk.
It was the most honest piece of policymaking anywhere this year, because it did not begin by asking how to keep the passages open. It assumed they had closed and asked how long you can live inside the closure. Eight months of evidence have now accumulated on exactly that question, and the answer is stranger than either the optimists or the catastrophists expected.
The hard cases are in Ukraine, the Gulf, Greenland, the bond market and the data centres. The list looks like a jumble of wars and spreadsheets. It is not. Each chokepoint runs the same arithmetic: closing one is cheap, keeping one open is ruinous, and routing around one is expensive in ways that take months to surface.
Hormuz is the proof point, and it has stopped behaving the way the models said it would. Iran shut the Strait on 28 February, a memorandum reopened it from around 17 June, the ceasefire collapsed over shipping on 7 July and Iran declared it closed again. That is 236 days. IMF PortWatch counted four transits on 18 October against a pre-crisis baseline near 85 a day, and USNI News reports October has brought the highest number of attacks on shipping since the war began. By February’s arithmetic this should be a global depression.
It is not, and the reason is the development of the year. Kpler data reported by the Wall Street Journal on 21 October put Arabian Gulf oil exports above 24 million barrels a day in the week to 18 October, against a pre-war 23.3 million, excluding Iranian volumes entirely. Roughly 40 percent of the region’s crude now bypasses the Strait through the Saudi pipeline to Yanbu and the Emirati line to Fujairah, against 17 percent before the war. What still crosses moves in escorted convoys, often transferring cargo between tankers offshore with transponders off. The passage is closed; the oil is moving. Brent was around $109 on 21 October, which is what the market charges for that distinction.
The exception matters for anyone who burns fuel rather than ships it. Refined products through the Strait are running near 677,000 barrels a day against 3.6 million before the war. Crude found a detour. Diesel did not. It is a reasonable reading, though not a proven one, that the system has not absorbed the closure so much as relocated its cost onto whoever sits furthest down the chain.
The International Monetary Fund’s October outlook shows the same split. Growth is held at 3.1 percent for 2026 and lifted to 3.4 for 2027, with headline inflation at 4.7 percent before easing to 4.1. The headline is unchanged from April, but the composition has been reshuffled: an artificial intelligence boom offsetting a war-induced supply shock. The Fund’s baseline assumes the Strait reopens in March 2027. That assumption, not the growth number, is the forecast worth watching.
Ukraine is the same logic pointed the other way. Kyiv’s defence ministry said on 4 October that long-range strikes had disabled 51 percent of Russia’s refining capacity, against the General Staff’s 45 percent in late September. The claim is Ukraine’s own and not independently verified, but Putin conceded the damage at Valdai on 1 October, putting it near 1 percent of Russian GDP. The consequence landed in Washington. On 13 September the American president urged Ukraine to stop hitting refineries, blaming the strikes rather than the Iran war for fuel prices; on 9 October he announced a deal to buy Russian diesel; on 11 October he declared an energy ceasefire neither Moscow nor Kyiv had agreed to. Russia struck six Ukrainian energy facilities within hours. Across 1,200 kilometres the ground has barely moved all year. Attrition is what a war looks like when both sides can close things and neither can open them.
The blockages are not limited to geography. The OECD expects governments and companies to raise $29 trillion from bond markets this year, with 30-year yields up and issuers shortening maturities, which lowers the coupon today and concentrates refinancing risk into a narrower window tomorrow. American debt crossed $40 trillion on 18 August, five months after $39 trillion. In the first nine months of this fiscal year, net interest of $827 billion exceeded defence spending of $713 billion.
Artificial intelligence, dressed as an expansion, is a chokepoint too. Nine major players raised $122 billion from bond markets in 2025, nearly half of all technology issuance worldwide, and have forecast capital expenditure of $4.1 trillion for 2026 to 2030, which is $1.1 trillion more than every non-financial company in America spent on capital expenditure in 2025 combined. It funnels through the same handful of fabs, the same constrained grid, the same few firms. The Fund now lists a reassessment of AI expectations among its principal downside risks, which is a polite way of saying the thing holding up global growth is also the thing most likely to break it.
Even the power to tax imports has proved a chokepoint, and a visibly fragile one. The Supreme Court closed it on 20 February, ruling six to three that the emergency powers statute the president invoked never authorised tariffs. The administration re-plumbed within hours, and when the replacement surcharge hit its 150-day limit on 24 July a Section 301 regime took effect the same minute at 10 to 12.5 percent across roughly 60 economies including India. The bill for the first attempt is now visible: by early October roughly $126 billion had been refunded to importers with interest, and the replacement regime is before the Court of International Trade, argued on 30 September and awaiting decision.
India sits at the sharp end of this, not because it is party to any of these fights but because it has maximum exposure to chokepoints and minimal control over them. The Kiel Institute’s modelling put the heaviest welfare losses on South Asia, sub-Saharan Africa and the Middle East, and found the damage roughly doubles if Saudi exports are blocked too, which is the scenario the Yanbu bypass has quietly held off all year. India imports its energy through a passage it cannot police, in a currency it does not issue, under trade rules that keep being rewritten in Washington.
The rewriting now has a rhythm. The 25 percent penalty on Indian goods over Russian oil was rescinded on 7 February, then rendered invalid from inception by the February judgment, with refunds still in the courts. The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 passed the Senate 86 to 11 on 7 August and the House 262 to 159 on 16 September, and was signed on 18 September. It authorised tariffs of up to 100 percent on the five largest buyers of Russian oil and gas, a list on which India sits with China, Azerbaijan, Hungary and Slovakia, and required the measures within thirty days. On 16 October, two days before that deadline, the president waived them in the national interest. The law stands; the duties do not. The lesson is not that India won the round. It is that nothing here was ever stable enough to be worth winning, and a waiver is withdrawn as easily as it is granted.
Europe spent the year learning the same thing. In January the White House threatened tariffs on Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland, all treaty allies, until Greenland was sold, then withdrew the threat four days later at Davos. Danish Prime Minister Mette Frederiksen’s answer, that if the United States militarily attacked a NATO country everything would stop, and that “includes NATO and therefore post-second world war security,” was given in the window between the two. Two weeks earlier, American forces had taken a sitting head of state out of Venezuela and arraigned him in New York. Whatever one thinks of Nicolás Maduro, the precedent is on the books and every capital has read it.
So Europe is paying. Defence expenditure across the European Union reached €418 billion in 2025 and is projected at €454 billion this year, while Washington reviews a troop presence of around 80,000 that Congress has legislated a floor of 76,000 to protect. The bill lands on budgets that cannot carry it evenly: France announced €54 billion of savings for its 2027 budget on 1 October, and the European Central Bank calculates that roughly 70 percent of the euro area’s additional defence spending comes from Germany alone. Spending more is not the same as building a defence.
And the asymmetry is not close. American officials confirmed in August that underwater drones had identified more than a hundred suspected mines in the Hormuz shipping lanes. A sea mine costs a few thousand dollars. The convoys, pipeline conversions and naval escorts that now move Gulf oil around the obstacle cost billions, and they have bought back the volumes without buying back the price or the diesel.
So the challenges collapse into one, and it is not a list of enemies. The world’s narrow passages have never been cheaper to shut, never been more load-bearing, never less reliably guaranteed. What this year added is that routing around a closure is possible, and that the cost of doing it falls on whoever has the fewest alternatives. Taiwan stopped pretending otherwise in August and started timing how long the lights stay on. Eight months of Hormuz have answered the question it was asking. How many other capitals have bothered to read the answer?
