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The new tensions in the Middle East are at a key stage for global energy markets that has hit. Reuters reported that Iran has begun to notify ships that it closed the Strait of Hormuz.
Over 20 million barrels of oil per day (about 20% of global supply) will be directly affected if an official shutdown is called.
Ships passing the Strait of Hormuz have begun receiving warning messages as tensions in the region quickly escalated after the latest US airstrikes against Iran. In the US, the administration of ships has urged ships not to go through the strait.
Located between Oman and Iran, the Strait of Hormuz is an inter-Iran link from the Persian Gulf to Gul of O Man with the Arabian Sea. Around a-fifth of global oil consumption goes through this narrow strait every day.
In 2024 data, 38% of the total crude oil passing through the strait (about 5 percent) came from Saudi Arabia alone. Per day, 5 million barrels per day) for . This also provides oil for the US and European Union countries, which are also a route to .
Why Is There No Alternative Route?
Most of Saudi Arabia’s oil production from Kuwait, Qatar, Bahrain and much of the country is produced by the Strait of Hormuz as its sea access point for production. experts believe that there are only 6 pipelines, while the alternative. Paraphrasing 5–7,. It could divert 5 million barrels a day, representing an important decline in around 13 per cent of global supply.
In a 2025 analysis by JPMorgan Chase, the closure of the Strait of Hormuz was described as “theworst-case scenario” in an Israel–Iran war. The bank’s forecast suggests that oil prices could rise to the $120–130/barrel range in such a case, according to its prediction.
This could also increase US inflation, as it is a . The CPI calculations are directly based on energy prices. Fight study by Fed researchers, each $10 increase in oil prices can add about 20 basis points to inflation. By the time they have been lows, oil prices have already increased by about $15; this theoretically means roughly 30 basis points of further pressure on inflation.
In the US, inflation last approached 5% in March 2023, during the Federal Reserve’s period of aggressive interest rate hikes.
Daily costs for transporting 2 million barrels of crude oil from the Middle East to China have risen, and are about $200,000. That’s the 584% increase over the first week of January and is the highest level since pandemic.
Radar figures indicate the already accelerated reduction of oil and LNG tankers by their passage through the Strait of Hormuz. The US has also warned ships to stay at least 30 nautical miles from U.S. military assets in the region, as well as a warning by the US for their safety.
Modern history The Strait of Hormuz is the first closed-off street in modern history. But by the time markets start putting pressure on prices in the geopolitical risk premium, markets are already beginning to price. But when oil futures open on Sunday night, it will be a key factor in the direction of prices.
It’s now that all eyes are on Washington, as is the case with . Whether US President Donald Trump will call for another diplomacy treaty or continue military pressure could determine the fate of energy markets, whether it is in demand by his own party.
*This is not investment advice.
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