S&P Global said according to its Commodities at Sea data, on 1 March only 5 oil tankers transited the Strait compared with around 60 tankers per day recently.
If the reduction in tanker traffic continues for a week or so it will be historic. Beyond that it would be epochal for the oil market with prices rising to ration scarce supply and impacts in financial markets. The duration of the war is critical as to whether it will be historic or epochal, it said.
In the first two months of this year 20.8 million barrels per day of crude oil and products was shipped via the Strait of Hormuz, with 82 per cent going to Asian markets. About 18 per cent of global LNG supply also transits the Strait as well. The loss of a good part of this energy supply could fuel financial and economic shocks, S&P Global said.
When it comes to oil, the actual impact would be less than 20.8 million barrels per day. If tankers halt transiting the Strait, as much as 15 million b/d of crude oil and products—most of which is crude oil—are at risk, with the precise amount dependent on the utilization of Saudi and Emirati pipelines that bypass the Strait of Hormuz, it said.
While not certain, the risk is real. The potential impact on global oil supply and the world economy could be so significant that it is difficult to imagine a worst-case scenario—no tankers transiting the Strait—lasting more than a short while, but it could. The duration of reduced tanker transits will be determined by how effective Iran is at deterring traffic through military means, including drones, S&P Global said.
The scale and duration of a price spike will depend on how much oil is kept off the market—and for how long—due to danger in the Strait, higher shipping insurance rates, or potential damage to Gulf infrastructure. A supply disruption even at the mid-range of volumes at risk—7 to 8 million barrels per day of crude and products—would be higher than the volume that was initially at risk when Russia invaded Ukraine or the volume cut off from the market following Iraq’s 1990 invasion of Kuwait, it said.
All major players—including Gulf states, the US, China, India, and Europe—want oil flows restored fast. But confidence in safe transit may take time to rebuild, and risk tolerance varies, S&P Global said.
Before the outbreak of hostilities, we expected global crude oil production to exceed demand by 1.4 million barrels per day (b/d) in the first quarter of 2026 and by an average of 1 million b/d for the year overall. The war risk means supply could fall short of expectations and lead to prices rising high enough to ration relatively scarce supply, it said.
In the near term, prices will swing in response to headlines, perceptions, rumors, and—in the event of a prolonged reduction in flows via the Strait of Hormuz—panic or emergency buying at any price. When futures trading started in the evening (US time) on Sunday, March 1, Brent crude oil opened $9.09/b higher to $81.57/b, although it subsequently eased. But note that a risk premium prior to the conflict had already carried prices around $60/b to over $70/b. Prices will be volatile—both up and down, S&P Global said.
What if flows via the Strait remain low—or there is a significant loss of oil infrastructure in the Gulf region? The exact circumstances and volumes impacted would shape the price response, but the amount of lost supply could go well beyond what could be offset through other means, including higher production elsewhere, it said.
Government-controlled reserves in China, the United States, Europe, Japan, and South Korea provide a buffer for those areas. Markets with small or no significant inventories would face the brunt of the negative supply impact. If, for example, there is a 7 million b/d loss of supply for many months, prices would have to increase—to $100/b and perhaps much higher—to ration supply while at the same time demand would fall, S&P Global said.
Rumors and incomplete information will fuel swings in sentiment and prices, often disconnected from market fundamentals. Indeed, large price swings are possible amid a wide war in the Middle East. The higher prices move, the greater the efforts to tame the oil price through more oil production—OPEC+ announced a nominal increase of 206,000 b/d effective April 1—and the use of oil in strategic reserves, it said.
