{"id":"f-73cd9b4b27-1acbff0f-14a2-5004-88b7-b20489b5d9fe","title":"How Strait of Hormuz closure drives, crude & global energy crisis? Explained","description":"The escalating Middle East tensions and Iran’s closure of the Strait of Hormuz have resulted in a sharp surge in global oil and gas prices. With 20% of the world’s oil supply passing through the Strait being stopped, crude prices soared over 5%. Experts predict Brent could reach $100-$120/barrel.","timestamp":1772529008,"category":"international","headline":"How Strait of Hormuz closure drives, crude & global energy crisis? Explained","modifiedHeadline":"Strait of Hormuz Under The Spotlight: Here’s Why","subCategories":["scid_67971418"],"subcategoriesName":["Global Affairs"],"region":"IN","fcSummary":"The escalating Middle East tensions and Iran’s closure of the Strait of Hormuz have resulted in a sharp surge in global oil and gas prices.","summary":"The escalating Middle East tensions and Iran’s closure of the Strait of Hormuz have resulted in a sharp surge in global oil and gas prices.","ctaUrl":"https://trends.glance.com/newz/astrology/IN/en/news9/f-73cd9b4b27-1acbff0f-14a2-5004-88b7-b20489b5d9fe","sourceUrl":"https://www.news9live.com/business/biz-news/how-strait-of-hormuz-closure-drives-crude-global-energy-crisis-explained-2938485","bannerImage":"https://g-mob.glance-cdn.com/public/fc/image/85mP8yIrsfh0.webp","content":"

New Delhi: Crude Oil prices recorded a sharp jump on Monday as the US-Iran’s joint military operation against Iran escalated as Tehran responded with retaliatory

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strikes not only on Israel, but other countries such as Qatar, Saudi Arabia, Bahrain the UAE. The Middle East crisis has led to disruptions to tanker traffic as Iran’s Revolutionary Guard Corps (IRGC) has stated that the Strait of Hormuz is ‘closed’ and if any breaches the blockade, it will be burnt.

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It may be noted that Strait of Hormuz as 20 per cent of the world’s oil supply passes through this sea lane. Tanker traffic dropped sharply amid disruption of satellite navigation systems, data and analytics firm Kpler said on X.

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Crude prices soared more than 5 per cent, which could lead to higher prices at pumps. The prices for natural gas could also inflate. Notably, the gasoline prices in the US remained high as a major supplier of liquefied natural gas to Europe said it would stop production because of the war.

Giving a detailed picture on the impact of closure of Strait of Hormuz on crude oil and world economy, Kedia Advisory said global crude oil markets have entered a high-volatility phase following escalating geopolitical tensions around the Strait of Hormuz. Brent crude surged nearly 13% to trade above $82 per barrel at the weekly open, reflecting heightened supply disruption fears. The market is actively pricing in a geopolitical risk premium, with multiple global energy research agencies outlining bullish scenarios under continued disruptions.

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It further stated that refined products are also facing risks as 9 per cent of global diesel shipments transit through Hormuz and 18% of global jet fuel flows move through the strait.

Geopolitical Trigger: Strait of Hormuz at the Core

The Strait of Hormuz remains the world’s most critical oil chokepoint, handling nearly one-fifth of global oil shipments. Even precautionary disruptions—such as insurance premium hikes and tanker rerouting—have materially impacted sentiment.

The financial advisory group led by Ajay Suresh Kedia said that the current situation is not yet defined by physical supply destruction, but by – Elevated war-risk insurance premiums, temporary tanker hesitations and strategic positioning by Gulf exporters.

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Global financial institutions on Crude oil prices

Citi has revised its near-term Brent forecast upward by $15 to $85 per barrel, projecting a trading range of $80–$90 in the immediate term. Their base case assumes geopolitical de-escalation within 1–2 weeks. However, in an extreme scenario involving infrastructure strikes, Brent could spike toward $120 per barrel, with a 20% probability assigned.
Rystad suggests that if Hormuz disruptions persist for days to weeks, Brent could test the $100 mark. Importantly, even additional OPEC+ output would still require transit through the same strait, limiting its ability to stabilize global supply.
Goldman estimates that crude currently embeds an $18 per barrel real-time geopolitical risk premium. Markets are effectively pricing in a potential 2.3 million barrel per day supply reduction sustained for one year.

Wood Mackenzie has warned that if tanker flows through Strait of Hormuz are not restored quickly, prices could move decisively above $100 per barrel.

OPEC+ Constraints and Structural Limitations

Although OPEC+ retains spare capacity, any incremental production increase must physically pass through Hormuz. Therefore, supply augmentation is structurally constrained under sustained disruption, the report mentioned.

If conflict extends beyond three weeks:

GCC producers may exhaust storage buffers
Production cuts could follow due to logistical bottlenecks
Thus, OPEC’s theoretical spare capacity becomes ineffective under strait closure scenarios.

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How Strait of Hormuz closure drives, crude & global energy crisis? Explained

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