What is the origin of the term dire straits?

The term "dire straits" which means desperate circumstances has no particular origin. It is just one of those phrases which people adopted as a cliche to describe a particular thing.

It is spelled strait - it has no relation to straight. A strait is a difficult circumstance.

The Word, dire, comes from the Latin Word, dirus, which has a meaning close to terrifying. The Word, strait, is a derivation of the Word, straight, and originally had a similar meaning - tight and/or narrow. In the 14th century, it's meaning became more specified to mean narrow waterway.

A literal translation for dire straits, then, would be terrifying narrow (or tight) waterway. A very nice metaphor for what we understand this phrase to mean.