When the Strait of Hormuz closes

With tensions rising and American military equipment accumulating in the Middle East, a scenario that poses a significant risk to the global energy balance is returning to the forefront of discussions. The Strait of Hormuz is only 33 kilometers wide at its narrowest point, and its blockade would cut off the oil-producing countries of the Persian Gulf from the world market. The importance of the strait has declined relatively over the years due to global development of oil production. Nevertheless, approximately 20% of global oil production passes through this key maritime artery, and its closure would cause an immediate supply shock.

The capacity of alternative routes is limited. Existing oil and gas pipelines can only bypass the strait to the extent of around 3.5 million barrels per day, or about 15% of the normal volume. A full replacement is therefore not realistic. The greatest impact would be felt by China, India, Japan, South Korea, and other Asian countries, which are among the main consumers of oil and gas from the Persian Gulf region.

Europe is in a relatively more favorable position. The Gulf countries account for approximately 5% of gas imports and 12% of oil products imports to the EU, and the energy crisis of recent years has led to a significant diversification of suppliers. A direct physical outage would therefore be more manageable than in the past. However, the price effect would be global and would not spare European economies.

Markets would respond primarily with price increases. From the current $68 per barrel, the price of oil could rise to between $100 and $150, depending on the duration and intensity of the conflict, according to historical estimates. Secondary impacts would affect logistics and air transport. The air corridor between Europe and Asia would shift by hundreds to thousands of kilometers, depending on the risk, which would increase flight times and costs for carriers.

The closure of the strait would thus represent another supply shock with inflationary consequences, testing the resilience of global economies and the ability of energy markets to respond flexibly to geopolitical tensions.