What a Blocked Strait of Hormuz Would Mean for Oil and Natural Gas Prices

As the United States masses forces near Iran and Tehran has drilled in the Strait of Hormuz, the waterway’s role in global energy supplies is back in focus. Al Jazeera published an explainer on what a closure would mean for oil and liquefied natural gas, and figures from the U.S. Energy Information Administration help show how much passes through it.

According to the EIA, about 20 million barrels of oil a day moved through the strait in 2024, roughly a fifth of global petroleum liquids consumption. ABC News likewise described the route as carrying roughly 20 percent of global oil supply. About a fifth of global liquefied natural gas trade also passed through the strait in 2024, mainly from Qatar, the EIA said. Saudi Arabia shipped about 5.5 million barrels a day through it, 38 percent of the strait’s crude flows, more than any other producer, according to the agency and Al Jazeera.

Asia is most exposed. The EIA reported that 84 percent of the crude oil and condensate and 83 percent of the LNG that moved through the strait in 2024 went to Asian markets, and that China, India, Japan and South Korea together took 69 percent of the crude and condensate flows. ABC News said most of the oil moving through the strait goes to Asia, mainly China and India, and that the United States imports about 500,000 barrels a day through it.

The alternatives are limited. The EIA said Saudi and United Arab Emirates pipelines offered roughly 2.6 million barrels a day of spare capacity in a disruption. Saudi Arabia’s East-West pipeline, rated at 5 million barrels a day, links the Gulf to the Red Sea port of Yanbu, and the UAE’s 1.8 million-barrel-a-day line runs to the Fujairah terminal on the Gulf of Oman. Al Jazeera’s explainer likewise warned that these routes and Gulf storage could cushion only part of a serious disruption.

The risk is not purely hypothetical. On Feb. 17 Iran announced a temporary closure of the strait for live-fire drills while its negotiators held indirect nuclear talks with the United States in Geneva, PBS NewsHour reported, calling it the first time Iran had announced closing the waterway. PBS said the USS Gerald R. Ford was sent to the region to join the USS Abraham Lincoln. CNBC reported Friday that Iran has held drills in the strait and joint naval drills with Russia.

Markets have already responded in part. CNBC reported that Brent crude was at $71.76 a barrel on Friday and that both Brent and U.S. benchmark crude had hit six-month highs the day before. ABC News reported Brent had jumped more than 7 percent in two days to about $71, its highest since July, though still below its level a year earlier.

Some analysts see a well-supplied market. Morgan Stanley’s Martijn Rats called the oil market “very well supplied” on Friday, citing Iran tensions, large Chinese stockpiling and high freight rates as the supports under prices, CNBC reported. Barclays said any U.S. strike would likely be time-limited with defined targets, and that if conflict is imminent, “it is likely to be short lived, in our view.”

ABC News cited experts as saying a military conflict could close the strait, which would push up the price of oil and other goods. It noted that Iran produces less than 3 percent of global oil and that the United States, though a net crude exporter, sees its prices track global supply and demand.