What would happen if Iran closed the Strait of Hormuz?

Commodity monitoring at sea has also recorded oil and product outflows averaging about 20.4 million barrels per day in February so far, just below January levels, evidence that geopolitical tension alone can slow shipments before any physical disruption occurs.

“The risks of the Strait of Hormuz relate not only to closure, but also to fleet productivity. If Iran escalates by seizing tankers or using drones to threaten commercial traffic, journey times and potentially the costs of Middle East oil exports will increase further.” S&P Global CERA Analysts He said.

With many shipping companies I already mentioned They are avoiding the Strait of Hormuz and expect delays and rescheduling of shipments.

What does closing the strait mean?

There is no alternative export system on a similar scale. Saudi Arabia and the UAE operate side pipelines, but these cover only a portion of Gulf flows, while Iraq, Kuwait and Qatar lack meaningful alternatives.

If the strait were officially closed, most oil exports from the Gulf would be cut off from the world almost immediately. Even if Saudi Arabia and the UAE push alternative pipelines to the limits, Analysts say About two-thirds of Gulf exports will remain stuck.

LNG markets will also be affected. Qatar, the world’s largest exporter of liquefied natural gas – a super-cooled form of natural gas that is shipped by tanker – relies almost entirely on the Strait of Hormuz to export its fuel.

If the road is closed, Asian buyers could lose their key suppliers within days. Asian economies such as Japan, South Korea, China and India It depends greatly On imported liquefied natural gas to generate electricity.

Getting the oil from somewhere else, such as the Atlantic Ocean, means that Longer charging times And higher costs, which may push prices to higher levels.

How it might affect consumers

Historical models suggest that a sudden loss of Gulf supplies could exacerbate the problem Oil prices are rising sharply.

If that happens, the impacts will likely reach global consumers quickly: higher gas prices, higher airfare prices, and higher transportation costs that fuel food and commodity prices.

Financial markets typically react even before physical shortages emerge, with oil futures prices rising, transportation stocks weakening, and the currencies of major energy exporters strengthening as traders price in the risk of disruption.

Strategic oil reserves can mitigate the shock, but their release takes time and cannot completely replace Gulf crudes.

Within the Gulf region, halting exports will quickly strain government finances. Countries such as Iraq, Kuwait and Qatar rely heavily on oil revenues to finance public spending. If shipments stop, storage facilities could quickly fill up, forcing producers to cut production and lose income.

The effects of shipping will extend beyond oil. Tanker rerouting, insurance repricing and marine risk zones tend to push up bulk and container freight rates, impacting logistics services worldwide.

This story originally appeared on Wired Middle East.