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The global energy market has experienced some of its most dramatic price swings this week as the US-Israel conflict with Iran disrupts oil shipments through the Strait of Hormuz, one of the world’s most critical energy trade routes.
Vital Global Energy Route Disrupted
The narrow maritime corridor south of Iran is a key artery for global energy supplies. Roughly 20 million barrels of oil per day pass through the strait, accounting for about one-fifth of the world’s oil and seaborne natural gas trade. Oil and liquefied natural gas (LNG) from major Gulf producers travel through this route to reach markets across Asia, Europe, and beyond.
Although the Strait of Malacca handles slightly more oil shipments daily, the Hormuz passage is far more difficult to bypass, making it the most sensitive chokepoint in the global energy system.
At its narrowest point, the strait is only 21 miles wide, creating a tight passage through which exports from major petroleum producers such as Saudi Arabia, the United Arab Emirates, and Qatar must travel to reach international markets.
Tanker Traffic Halts After Iranian Threats
In retaliation for US-Israeli airstrikes, Iran has effectively used its strategic position to pressure global energy flows. The Islamic Revolutionary Guard Corps warned that any vessel attempting to cross the strait could be attacked, threatening to “set ablaze” ships using the route.
Following these warnings, hundreds of oil tankers have reportedly halted their journeys through the waterway, significantly slowing the flow of Middle Eastern crude to the world.
Infrastructure Attacks Add to Supply Concerns
The situation has been further complicated by attacks on energy infrastructure across the region. Airstrikes reportedly hit at least five energy facilities near Tehran, creating scenes described by witnesses as “apocalyptic.”
Oil infrastructure in Saudi Arabia and Qatar has also been affected, increasing fears that supply disruptions could worsen even if shipping routes reopen.
Oil Storage Near Capacity
With tankers unable to move crude through the strait, oil storage facilities in Saudi Arabia, the United Arab Emirates, and Kuwait are approaching full capacity. If exports remain blocked, major oilfields may need to temporarily shut down production.
Qatar’s energy minister warned that Gulf energy producers could be forced to halt production within weeks if the disruption continues. Analysts say oil prices could surge to $150 per barrel under such conditions.
China Faces Major Exposure but Holds Reserves
The country most exposed to the crisis is China, which imported around 5.4 million barrels of crude per day through the strait last year. This included large volumes of sanctioned Iranian oil.
However, China appears relatively well-prepared. Over the past few years, it has accumulated massive strategic reserves estimated at more than 1.2 billion barrels of crude, enough to cover three to four months of supply.
South Asia Feels Energy Pressure
Other Asian economies could face greater short-term pressure. Countries such as Pakistan, Bangladesh, and India rely heavily on Middle Eastern gas shipments.
Governments in Bangladesh and Pakistan have already begun implementing emergency measures, including reducing electricity consumption, closing universities temporarily, and preparing remote-work policies to conserve energy.
Meanwhile, the White House has temporarily waived certain sanctions to allow India to purchase Russian oil currently stranded at sea.
Global Leaders Seek Solution
World leaders are closely monitoring the situation. The Group of Seven met this week to discuss strategies to stabilize global energy markets.
During the crisis, Brent Crude prices surged nearly 30%, reaching about $119.50 per barrel. It marks the first time oil prices have crossed the $100 threshold since the Russian invasion of Ukraine triggered global energy turmoil.
