The closure of the Strait of Hormuz, a critical maritime chokepoint, has effectively halted tanker traffic following regional military activity and the withdrawal of insurance coverage. This disruption threatens to cause a significant and immediate spike in global oil and liquefied natural gas prices.

Impact on Global Oil Markets

The Strait typically facilitates 15% of global oil supply. The current closure creates a dual supply shock: it not only stops current exports but also renders inaccessible most of OPEC+'s spare capacity, a key tool for market balancing. Analysts warn that if flows are not quickly restored, oil prices could exceed $100 per barrel, with a plausible scenario involving weeks of disruption. This situation is compared to the early days of the Russia-Ukraine conflict, which saw prices surge past $125 per barrel. While OPEC+ has agreed to a modest production increase, and alternative routes like Saudi Arabia's East-West pipeline exist, none can fully compensate for the loss of Strait transit.

Impact on Global LNG and Gas Markets

The disruption is equally severe for LNG, with nearly 20% of global supply—approximately 81 million tonnes primarily from Qatar—transiting the Strait annually. A halt would reignite fierce competition for cargoes between Asia and Europe, especially given Europe's below-average storage levels. Each week of closure risks 1.5 million tonnes of LNG exports, forcing markets to draw heavily on storage and tightening conditions well beyond the Strait's reopening. The crisis could be compounded by precautionary closures of Israeli gas fields that supply Egypt and potential disruptions to Iranian gas exports to Turkey. The scale of impact is likened to the curtailment of Russian gas to Europe, which previously drove prices to historic highs.

Maritime Security Context

The security environment in the Persian Gulf and surrounding waterways is described as highly volatile due to significant ongoing military activity. This presence elevates threats to commercial shipping, including risks of miscalculation near military units and sensitive infrastructure, as highlighted by United Kingdom Maritime Trade Operations (UKMTO), the primary maritime security coordination point in the region.