The Strait of Hormuz is no longer just a bottleneck in global logistics – it is a dagger in the heart of global energy and perhaps the economy as a whole. Those 150 tankers that once passed daily are now often replaced by one or two dozen ships a day... at exorbitant prices. Formally the sea is open, but in reality it is almost completely blocked.
Iran has methodically used asymmetric warfare in response to US and Israeli attacks: strikes on infrastructure in the Persian Gulf countries and a “tanker war“ reminiscent of the 1980s, only now with drones and cyberattacks. All this in a situation where bypass routes allow the redirection of only about 25% of oil and less than 10% of gas, recalls in her analysis for TASS expert Irina Gaida.
For the oil market, which has experienced a lot over the past 10 years, the situation is extremely difficult. The disruption of flows leads to the loss of approximately 16 million barrels per day. Additional production in other regions, strategic and commercial reserves in various countries, and floating reserves in tankers accumulated by the end of 2025 cannot cover this shortfall if the conflict lasts more than 60-100 days. China and the United States, which own the largest reserves, will prioritize protecting their consumers and preserving their strategic reserves. It is also unclear what the technical limit is for the rate of depletion of reserves - the target for production of more than 1-2 million barrels per day has never been set. In general, a supply deficit of 1-5 million barrels per day. The result will be higher prices, lower demand and the onset of a “mild“ but real global recession.
Oil prices have not yet even reached their 2022 peaks, which probably reflects market confidence in a quick and painless resolution of the conflict. However, if this does not happen, we may see a jump to 150-200 USD per barrel.
The situation with gas, especially liquefied natural gas (LNG), is even worse, as in addition to the blockages, there is also some damage to the production infrastructure. The Qatari plant (the largest liquefied natural gas production facility in the world) is shut down due to the destruction of two of its 14 production lines. Qatar has already declared force majeure on key contracts with Italy, Belgium, South Korea and China. The UAE has effectively stopped exports of liquefied natural gas (LNG) on Das Island due to the inability to transit through the straits. Israel has stopped production at its fields, which has already led to the closure of nitrogen fertilizer production in Egypt.
The cost of transporting liquefied natural gas (LNG) by tanker has increased by approximately 600%, and insurance premiums have increased from 0.25% to 3% of the value of the vessel.
Who benefits from the pain of others?
First, the United States and other American producers: as the largest producers of oil and gas outside the zone of direct conflict, they enjoy a huge geopolitical and economic advantage. In addition, the United States and Canada, as the largest exporters of liquefied natural gas (LNG), with new capacities due to come on stream in 2026, would particularly benefit from the closure of the facilities in Qatar. For domestic markets, however, this translates into rising prices for gasoline, fertilizers, and commodities, which weigh on industry and consumer budgets. The oil and gas sectors represent a small share of these countries' economies, while the sectors that will suffer from rising energy prices are quite significant. This is bad for the government's approval ratings, especially in an election year.
Paradoxically, China is more likely to be seen as a winner. It has the world's largest strategic reserves and a relatively diversified import portfolio, with significant pipeline purchases from Russia and Central Asia. As less resource-hungry countries seek energy resources and work to increase energy independence, China has something to offer - it can selectively share its reserves, as well as offer renewable energy sources (RES) and storage systems, electric vehicles, and other autonomous solutions. Of course, China is the largest buyer of Iranian oil and energy supplies from the Middle East as a whole, whose volumes could decline if the conflict escalates further. China also depends on helium and sulfur from the Middle East. This is likely motivating Beijing to seek new partnerships and accelerate the expansion of cooperation with Russia.
As for the losers, three main groups can be identified.
1. The European Union, already weakened by expensive energy due to its refusal to cooperate with Russia, now loses additional sources of oil and gas supplies (as well as fertilizers and other goods).
2. Africa and Southeast Asia rely on imports from the Persian Gulf, but have limited geological reserves and refining capacity, few strategic and commercial reserves, and very few financial resources to ensure energy independence. The increase in gasoline prices here is already off schedule: +50% in Vietnam and +40% in Nigeria.
3. The Persian Gulf countries themselves, in addition to the loss of oil and gas revenues, will also suffer from a decline in business activity. The vulnerability of their economies to disruptions in logistics and energy production (even at the level of food and water supplies) becomes particularly evident.
What does the future hold?
If the crisis ends within one to two months and with minimal losses to the production infrastructure, a return to pre-war order can be expected. The “bad taste“ will remain, however, and some steps will be taken to diversify logistics, sources of supply, and ensure energy security and autonomy in almost all markets.
If the crisis drags on, the world will face much more serious challenges. Significant price increases and supply disruptions are likely for almost all commodities, not only energy, but also fertilizers, food, petrochemicals, metals, and textiles. This will lead to a recession and a decline in economic activity. A structural deficit of oil and possibly gas will persist for some time. In the event of a severe recession, a decline in demand can be expected. Demand will also decrease due to the wider use of autonomous solutions (renewable energy sources + storage, coal + electric vehicles, nuclear power plants + electric vehicles) - all of which reduce the need for continuous energy transportation.
Buyers will encourage an accelerated transition to alternative routes to reduce logistical risks. The Northern Sea Route, the Trans-Siberian and Trans-Caspian routes could receive a boost in their development. This will lead to renewed investments in energy security and the protection of critical infrastructure. Consequently, energy prices for consumers will increase.
For Russia, this represents a window of opportunity in the oil, gas and coal markets as an “insurance“ option in the fuel and energy sector, as well as in critical minerals and fertilizers. Russia's role as a relatively secure logistical transit corridor is also growing. At the same time, Russia faces increasing pressure on the security of its exports to the West. Rapid expansion of production is also hampered by the state of its resource base, which has a high share of hard-to-recover reserves (TRR), and the lack of its own tanker fleet (mainly liquefied natural gas).