Ship traffic through the Strait of Hormuz has nearly halted following US-Israeli strikes on Iran, putting up to 20 million barrels of daily oil at risk and raising the prospect of the worst supply shock since the 1973 oil embargo.
The Strait, a critical energy chokepoint separating the Arabian Peninsula from Iran, is the main maritime route for Middle Eastern oil and liquefied natural gas (LNG) exports. Through the Gulf of Oman, it delivers Persian Gulf production from Saudi Arabia, the UAE, Kuwait, Qatar, Iraq, Bahrain, and Iran to global markets.
According to the UK Maritime Trade Operations, an average of 138 commercial vessels passed through the strait daily under normal circumstances. However, after attacks by Iran's Islamic Revolutionary Guard Corps targeting US- and Israeli-linked ships, traffic has dropped sharply.
Insurance companies have withdrawn war-risk coverage for vessels in the region, while leading container and tanker operators have suspended transits.
Last year, an average of about 15 million barrels per day (bpd) of crude oil and 5 million bpd of petroleum products transited the strait, totaling roughly 20 million bpd. This accounted for around one-fifth of global oil demand and roughly a quarter of seaborne oil trade, and any prolonged disruption of shipping through the Strait could cause significant supply disruptions.
Andres Cala, geopolitical energy analyst at Montel Analytics, told Anadolu that the shock could be historic. "A new energy shock, potentially the worst since the Arab oil embargo of 1973, is upon us," he said.
Cala said repairing the loss, restoring damaged infrastructure, and restarting idled production could take at least a few weeks, but likely longer. He added, "Partial disruptions may continue for months," highlighting the uncertainty around how long the crisis could persist.
Political factors may further complicate the situation. Cala noted that the upcoming US midterm elections in November could influence the administration's response, as high energy prices add to inflation pressures and could affect political calculations.
Oil flow disruptions continue to impact supplies, representing up to 20% of global demand.
Options for oil flows to bypass the Strait of Hormuz are limited. Only Saudi Arabia and the UAE have operational crude pipelines that could potentially reroute flows to bypass the Strait, with an estimated 3.5 million bpd to 5.5 million bpd of available capacity. Other countries, including Iran, Iraq, Kuwait, Qatar, and Bahrain, rely on the Strait to deliver the vast majority of their oil exports.
Cala said strategic reserves and alternative routes provide only limited relief. "Strategic reserves and alternative routes are small workarounds to ease the pain, but can't come close to offsetting the losses. Simply put, the world can't easily replace Persian Gulf supplies, especially if disruptions extend over time, and will need years to adapt to the new reality," he said.
He added that all countries, particularly those heavily dependent on global energy markets, face the worst-case scenario for any energy portfolio manager, requiring new energy paradigms to emerge.
- History shows scale of risk
Past oil crises underscore the scale of the risk. During the 1973 oil embargo, about 4.3 million bpd were removed from global markets, roughly 7.4% of global demand.
The 1978–79 Iranian Revolution cut supplies by about 5.6 million bpd, or 8.6% of demand. The 1980 Iran-Iraq War caused a daily loss of about 4.1 million bpd, or 6.8% of demand, while the 1990 Iraq-Kuwait War saw losses of roughly 4.3 million bpd, about 6.5% of global demand.
Further back, the 1956 Suez Crisis disrupted about 2 million bpd, representing roughly 11.4% of global demand at the time, though volumes were far smaller than those now threatened.
Comparing the current situation with past crises, Cala said the Hormuz disruption is far larger. "Even though the US timed its attack to coincide with forecasts of oversupplied global oil and gas markets, this shock will be more profound because disruptions are bigger than any other, represent a significantly larger share of the overall market, and may last longer, for both oil and gas," he said.
Cala noted that the 1973 oil embargo lasted about six months and cut global oil supplies by roughly 9%, with gas markets unaffected. He added, "By contrast, the ongoing Hormuz disruption is currently disrupting about 20% of the world's oil demand and 20% of gas exports, and affects Asia disproportionately due to its energy dependence, so the economic impact is much deeper at this juncture."
According to Cala, even if the disruption lasts only six months, similar to the Arab oil embargo, the price impact could trigger a major overhaul of global energy markets, driven by demand destruction, reduced upstream investment, and a reconfiguration of energy flows to prioritize supply security over prices.
Compared with historical crises, the current risk in the Strait of Hormuz points to the largest potential supply shock in modern oil market history, both in absolute volume and as a share of global demand.
By Firdevs Yuksel
Anadolu Agency
energy@aa.com.tr