Reuters reported this week that the IEA expects global oil supply to fall by 8 million barrels a day in March, or almost 8% of world demand, because Hormuz has been blocked since the conflict widened on Feb. 28. In its latest market backdrop, the agency said crude and product flows through the strait had fallen from around 20 million barrels a day to a trickle, Gulf producers had cut at least 10 million barrels a day of output, and LNG trade had also been materially disrupted.
Why the Strait of Hormuz shock is different this time
The scale matters. In announcing a record 400 million-barrel emergency stock release, the IEA said an average of 20 million barrels a day of crude and oil products moved through Hormuz in 2025, or about a quarter of global seaborne oil trade. Only part of that volume can be rerouted, which is why even a partial shutdown quickly becomes a broader supply shock.
Iran has shown only selective flexibility. Reuters reported Friday that Tehran allowed two Indian-flagged LPG carriers to transit the strait in a rare exception, while the broader blockade remained in place. The move showed that limited passage can be granted without restoring normal commercial flow.
Strait of Hormuz pressure is spreading beyond crude
The market is now repricing more than oil cargoes. By Friday’s close, Reuters reported, Brent had settled at $103.14 a barrel, above $100 for the first time since August 2022, as investors assessed not only lost exports but also shipping risk, fuel costs and inflation pressure. That leaves the disruption moving through freight, fuels and financial markets at the same time.
Asia is likely to feel the squeeze first because it typically absorbs most of the crude, condensate and LNG that leave the Gulf through Hormuz. The pressure is also broader than benchmark crude: diesel, jet fuel and LPG are exposed as regional export outlets clog, turning a shipping crisis into a wider energy-security problem.
Strait of Hormuz flashpoints did not start this month
The current rupture fits a longer pattern. In a June 2025 analysis, the U.S. Energy Information Administration again warned that Hormuz remained one of the world’s most important oil chokepoints, with very few practical alternatives if traffic were blocked. The warning looked theoretical at the time. It does not now.
Tensions were already visible in January 2024, when Iran seized the St Nikolas tanker in the Gulf of Oman after a U.S. sanctions dispute, and they were impossible to miss in July 2019, when Iran seized the British-flagged Stena Impero after weeks of tanker attacks and military brinkmanship. What is different in 2026 is not the existence of the threat, but the scale of the disruption and the speed with which it has spread from shipping lanes into the global pricing system.
For now, the question is duration. If the partial exemptions widen and alternative export routes recover some flow, the worst of the shock could ease. If Iran keeps using the Strait of Hormuz as its main pressure point, traders are likely to keep treating this not as a passing scare, but as a supply emergency with global consequences.
