Hormuz Strait Shipping Disrupted, Global Energy Market Faces Severe Test

Currently, the military strikes by the United States and Israel against Iran have disrupted shipping through the Strait of Hormuz, causing intense fluctuations in the international energy markets. Overall, this has not yet developed into a full-blown oil crisis, but warning signs have appeared in the market. The future trend depends on the development of the conflict and the status of passage through the strait. The traditional energy resources of the Middle East are once again highlighting their central role in the global energy landscape, while the global energy structure may accelerate its adjustment.

International oil prices are on a roller coaster

The recent military strikes by the US and Israel against Iran have nearly halted Gulf oil supplies, causing international oil prices to soar and fluctuate sharply, posing a significant risk of triggering a global energy crisis.

“After the US decided to launch military action against Iran, the world faces the risk of a comprehensive energy crisis,” said The Atlantic Monthly in a recent article.

Influenced by the Middle East situation, international energy prices have experienced large swings. According to Bloomberg, since late February, escalating security tensions in the Middle East have unsettled the global crude oil market. After the US and Israel launched airstrikes and Iran announced a “ban on ships passing through the Strait of Hormuz,” international oil prices surged sharply, approaching $120 per barrel, the highest level since 2022.

On March 9, President Trump stated that US military operations against Iran would “end soon” and announced plans to lift some oil-related sanctions to stabilize prices. G7 finance ministers also issued a statement saying that all parties are prepared to take necessary measures, including releasing reserves, to support global energy supply. Concerns over the impact of Middle East conflict eased, and international crude oil futures prices reversed sharply, falling from a peak to over $80 per barrel.

“The core reason for this market volatility is the first-ever substantial closure of the Strait of Hormuz in history, which directly triggered extreme fluctuations in international oil prices,” said Li Shaoxian, Honorary Dean of the China-Arab States Research Institute at Ningxia University. “The current decline in oil prices does not reflect a genuine market confidence recovery but is a typical wait-and-see stance, behind which lies a highly uncertain situation.”

US statements are contradictory. On the 9th, Trump hinted that the war might end soon, but a few hours later, he said the US “has not achieved enough victories” and aims for an “ultimate victory.” On the 10th, US Energy Secretary Chris Wray posted on social media that “the US Navy successfully escorted an oil tanker through the Strait of Hormuz,” but deleted the post minutes later.

Zou Zhiqiang, researcher at Fudan University’s Middle East Studies Center, told this reporter: “The military strikes by the US and Israel against Iran have caused nearly complete disruption of Gulf oil supplies, leading to soaring and highly volatile oil prices, with a huge risk of triggering a global energy crisis. However, the prices did not continue to rise or stay high for long, affected by multiple factors and conflicting dynamic information, showing a short-term spike and retreat. At present, it is still difficult to determine this as an actual oil crisis, and its severity cannot yet be compared to the two oil crises of the 1970s.”

Goldman Sachs predicts that if transportation bottlenecks persist, refined oil prices could hit a new high in the 21st century. Some analyses suggest that the systemic shocks caused by the recent Middle East tensions are the most serious global energy risk event in over two decades.

Li Shaoxian pointed out: “Currently, the de facto closure of the Strait of Hormuz continues. If this situation persists for four weeks, a surge in oil prices to $150 per barrel is highly probable. Although a true oil crisis has not yet formed, market signs of danger have appeared. This high-volatility, high-risk state cannot last long. If the blockade of the strait remains unresolved, it will have extremely negative impacts on the global economy, with effects cascading through industries, leading to high inflation, slowing economic growth, and other issues.”

“The ‘world’s oil valve’ affects energy markets deeply”

In recent years, the Middle East’s position in the global energy supply pattern has declined, but the interconnectedness of international energy markets has grown stronger. The current regional conflict and its global energy impact demonstrate that the Middle East still holds a core position in the global energy landscape.

“Although in recent years, US shale gas and shale oil technology have developed rapidly, and the global new energy industry has made great strides, this energy market turbulence highlights that traditional energies like oil and natural gas still occupy a central role in the global energy structure. The Strait of Hormuz, as a crucial passage for nearly one-fifth of the world’s maritime oil trade, affects the nerves of the global energy market. This also makes energy security a major issue that countries must pay attention to,” Li Shaoxian said.

The Strait of Hormuz runs in a ‘U’ shape between Iran and Oman, connecting the Persian Gulf and the Gulf of Oman, with its narrowest point only 33 kilometers wide. This limited-width route is the main or even the only outlet for oil exports from oil-producing countries such as Iran, Saudi Arabia, the UAE, Qatar, and Kuwait. Known as the “world’s oil valve,” it handles about 20% of global maritime oil trade, transporting roughly 20 million barrels daily. Over 90% of oil exports from major Gulf producers pass through this channel. Currently, Iraq, Qatar, Kuwait, and the UAE have all reduced their production.

The Economist’s analysis states that the disruption of navigation through the Strait of Hormuz is a headache for both Gulf energy exporters and Asian consumers. Countries like India, Singapore, and South Korea, while not immediately facing “oil cuts,” are under great pressure. Data shows that over 70% of South Korea’s crude oil supply comes from the Middle East, with about 65-68% of its imports passing through the Strait of Hormuz. Japan currently imports over 95% of its crude oil from the Middle East, most of which also relies on the Strait.

Even the US, which is not short of oil reserves, could be affected by price hikes. The Wall Street Journal reports that most of the shale oil produced domestically in the US is light oil. Many of its refineries are older and designed mainly for refining heavy crude. This explains why, despite exporting over 4 million barrels of crude oil daily, the US still imports about 6 million barrels daily. Even with energy self-sufficiency, the US cannot escape the shocks from Middle Eastern energy market fluctuations.

“Over recent years, the international energy landscape has undergone significant changes. Especially as the US has achieved energy independence and become an oil and gas exporter, the overall position of the Middle East in the global energy supply pattern has declined. However, the interconnectedness of international energy markets is stronger, and the influencing factors and internal logic are more complex, remaining fundamental to the global supply chain and consumption markets. Even the US, which has achieved energy independence, cannot fully escape the impact of international energy market turbulence. The recent regional conflict and its global energy shock demonstrate that the Middle East still holds a central role in the global energy landscape,” Zou Zhiqiang said.

“Global economies still rely on oil and natural gas transported through the Strait of Hormuz,” warned Bruce Kasman, Chief Economist at JPMorgan Chase. “If the conflict expands and persists, oil prices could break through $120 per barrel, increasing the risk of a global recession.”

The world faces a severe test

The core contradiction in the current global energy market remains the passage through the Strait of Hormuz. If the blockade worsens, a true oil crisis could occur, and the global energy market and world economy will face severe challenges.

Li Shaoxian analyzed: “It’s worth noting that after the recent surge in oil prices, there has not been a market panic collapse, which has objective reasons. One key factor is the proactive arrangements by oil-producing countries before the conflict. As early as February 28, before the outbreak of the conflict, tensions in the Middle East had already been high. Saudi Arabia, the UAE, Kuwait, and Iran had taken measures such as rapidly increasing crude oil loading and shipping out of the Persian Gulf. For example, Iran’s daily loading volume at Hark Island a month before the conflict was three to five times normal. Much of this pre-shipped oil is now floating in the open sea and will be gradually sold according to market demand, serving as a ‘buffer.’ Therefore, the actual shortage of oil in the market is not as severe as the data suggests, which is one of the reasons why prices have not continued to surge.”

Countries are also actively implementing response measures. Li Shaoxian believes that signals from the Trump administration about possibly relaxing some oil sanctions could mean easing sanctions on Russia’s oil exports. Since Russia’s oil exports do not pass through the Strait of Hormuz, releasing more oil into the international market could help offset the shortfall from the Middle East and ease current tensions. Additionally, the International Energy Agency announced on the 11th that 32 member countries agreed to release 400 million barrels from strategic reserves; G7 energy ministers expressed support for using strategic reserves to address supply and market volatility; Japan’s Ministry of Economy, Trade and Industry has called for domestic oil reserves to be prepared for release; South Korea has announced measures such as implementing a “price cap” on oil to stabilize domestic prices.

“While these measures have indeed helped soothe market sentiment to some extent, they are only short-term buffers compared to the daily trade volume of about 20 million barrels through the Strait of Hormuz. The core issue remains the passage through this critical channel. As long as the strait cannot return to normal, risk premiums in the market will remain high,” Li Shaoxian said. “The future trend of the international energy market is highly tied to the development of the Middle East conflict. If Trump’s statement that ‘the war will end soon’ proves true, and the passage through the strait gradually resumes, oil prices may return to a rational range. But if the conflict escalates, or if Trump’s government takes aggressive actions such as escorting ships, deploying troops to control the strait, or the US and Israel jointly occupy Iran’s Hark Island, it will likely intensify tensions with Iran and further deepen the blockade of the Strait of Hormuz. A true oil crisis could then occur, posing severe challenges to the global energy market and the world economy.”

Zou Zhiqiang also pointed out: “Due to the influence of measures like releasing strategic reserves and Trump’s statements about ending the war, current international market fears have eased somewhat. However, the regional conflict has not yet ended, and the disruption of Gulf energy supplies has not been resolved. In the short term, the international energy market will remain highly tense and volatile. The future depends on the conflict’s development and whether the Strait of Hormuz can be reopened. In the long run, this conflict highlights the powerful influence of the Middle East’s geopolitical position and factors, prompting countries worldwide to pay more attention to energy security and accelerating the transition to new energy sources, further adjusting the global energy structure.”

“This incident could have profound impacts on the global energy landscape. On one hand, the strategic importance of the Persian Gulf and the Strait of Hormuz is once again emphasized, as their role as the ‘throat’ of the global energy system cannot be replaced in the short term. Countries will increasingly focus on diversifying energy import channels and improving strategic reserves; on the other hand, this crisis could also serve as a catalyst for the development of renewable energy, with solar, wind, and nuclear energy gaining strategic importance. The awareness and pace of renewable energy development are expected to accelerate,” Li Shaoxian concluded.