For decades, every confrontation in the Strait of Hormuz followed a familiar pattern. Oil traders watched tanker routes, naval forces monitored military movements and governments worried about the possibility of higher crude prices disrupting the world economy. The narrow waterway became synonymous with energy insecurity because nearly a fifth of the world’s oil supply passes through it every day.
Now Iran is drawing attention to something far less visible but just as important to the functioning of the world economy. Beneath the shipping lanes and naval patrol routes, seven undersea fibre-optic cable systems carry enormous volumes of internet traffic connecting Asia, Europe and the Gulf. Tehran now wants tighter control over those networks, and the proposal is rapidly turning a maritime dispute into a communications and financial concern stretching far outside the Middle East.
Iran’s Revolutionary Guard Corps has proposed a system requiring foreign cable operators to obtain Iranian permits, pay transit charges and allow Iranian companies to manage repair and maintenance work inside the Strait of Hormuz zone. Iranian state-linked media outlets described the undersea cables as a national asset capable of giving Tehran greater geopolitical influence during a period of heightened confrontation with the United States.
The timing has raised concerns because the proposal arrives during a tense naval standoff that has already disrupted shipping routes and rattled energy markets. The Strait of Hormuz remains one of the busiest and most heavily monitored waterways in the world, but attention is now shifting from oil tankers on the surface to the communications systems resting quietly on the seabed.
That shift matters because undersea cables form the hidden structure supporting almost every part of the connected economy. International banking transfers, cloud computing systems, online trading activity, corporate communications and government data exchanges all rely heavily on fibre-optic networks laid across the ocean floor. Despite the rise of satellite internet services, industry estimates suggest roughly 99% of international internet traffic still travels through submarine cables because satellites cannot handle the same scale of high-speed data transmission.
Several of those routes pass directly through the Strait of Hormuz.
Major systems including the Asia-Africa-Europe 1 cable and the FALCON network connect countries across Asia and the Gulf to Europe through this corridor. India, the United Arab Emirates, Saudi Arabia and parts of Southeast Asia depend heavily on these routes for internet services, banking systems and cloud computing activity.
Iranian media outlets have openly framed the proposal as more than a technical or legal issue. FARS News Agency described tighter control over the cables as a way to turn the strait into one of Iran’s “power levers,” language that immediately drew attention from telecommunications analysts and governments monitoring the region.
The proposal goes much further than demanding transit fees. Tehran also wants foreign companies operating in the region to comply with Iranian laws and allow domestic firms to oversee maintenance and repairs involving cable systems inside the Strait of Hormuz. That condition is especially sensitive because repair access during military tensions can become complicated very quickly.
Undersea cables remain surprisingly vulnerable despite their importance to the world economy. Most disruptions usually happen by accident when fishing trawlers drag equipment across the seabed or ships lose anchors in bad weather. Earthquakes and underwater landslides also damage cables from time to time. Repair work often requires highly specialised vessels capable of locating faults deep underwater and lifting damaged sections back to the surface.
Military activity creates an entirely different level of concern because congested waterways, damaged vessels and naval deployments sharply raise the odds of accidental cable strikes. Analysts tracking maritime security in the Gulf say even a disabled ship drifting through the strait could drag anchors across cable routes if it loses control during combat or emergency manoeuvres.
Masha Kotkin of the Stimson Center recently warned that the risk of unintended cable damage rises sharply during military confrontations because ships hit during naval exchanges may lose manoeuvrability and drift directly into underwater communications routes.
The Financial System Running Through Hormuz Is Bigger Than the Oil Trade Above It
The economic importance of these cable systems extends far outside internet browsing or streaming services because financial markets, payment systems and cloud computing firms depend on uninterrupted connections between continents every second of the day.
Large banks route transactions through undersea cable systems continuously, while stock exchanges, payment processors and multinational corporations rely on low-latency communication lines to move information instantly across regions. Data centres in the Gulf and Asia also depend on those same cables to connect cloud systems serving businesses around the world.
Analysts estimate that networks tied to the region support roughly $10 trillion worth of financial transactions daily, a figure that explains why telecom operators and governments reacted quickly to Iran’s proposal.
A serious disruption in the Strait of Hormuz would not necessarily shut down the internet across entire countries, but it could slow traffic, reroute data across longer distances and create congestion in systems already operating near heavy capacity. Financial firms and cloud providers would likely experience delays first because they rely heavily on stable high-speed links for transactions and computing services.
India would be especially exposed because large volumes of internet traffic linking the country to Europe and parts of the Gulf move through routes crossing the Arabian Sea and Hormuz-connected systems. Outsourcing firms, financial companies, cloud providers and multinational businesses operating in India all depend heavily on uninterrupted cable connectivity.
The Gulf states face similar concerns because countries including the UAE and Saudi Arabia have spent heavily building cloud computing hubs and AI-related data centres aimed at attracting international technology companies. Those ambitions depend heavily on stable, uninterrupted undersea cable systems connecting the region to Europe and Asia.
The proposal also raises concerns about repair timelines during emergencies. Repair ships are expensive, limited in number and often controlled by multinational consortiums rather than governments. If cable operators are forced to seek Iranian approval before entering the Strait of Hormuz for emergency maintenance work, even routine damage incidents could become politically sensitive.
The financial burden attached to these systems is also substantial because building a single transoceanic cable route can cost anywhere from $300 million to $1 billion depending on length, landing stations and technical requirements. Telecom companies and technology firms spend years planning routes, securing international approvals and coordinating with multiple governments before cables are deployed.
Iran argues that its proposal is tied to maritime rights and seabed governance under international law, and Iranian outlets have cited the UN Convention on the Law of the Sea while defending tighter control over underwater cable systems passing through the strait.
Other governments and telecommunications firms may challenge Tehran’s interpretation because submarine cable routes are generally protected under multinational maritime agreements aimed at preserving open international communications.
