90 Ships Cross Hormuz Daily — What If Iran Closes the World's Oil Jugular?

Why the Strait of Hormuz Is the World's Oil Jugular

The Strait of Hormuz is only 33 miles wide at its narrowest point, with two 1-mile-wide shipping lanes (inbound and outbound) plus a 2-mile separation zone. Despite its narrow width, 90+ tankers transit daily, carrying 21 mb/d — more than any other oil chokepoint on Earth. The closest competitor, the Suez Canal, handles only 5.5 mb/d. No feasible canal or pipeline alternative exists that could replace Hormuz capacity within less than 10 years.

Iran's Hormuz Threat: How Credible Is It?

Iran has threatened Hormuz closure multiple times (2008, 2012, 2019) and has the capability to make it dangerous via: fast attack boats, anti-ship missiles (Noor, Qader), naval mines, and submarine warfare. However, full closure would be self-defeating — Iran exports its own oil through the Strait and relies on Hormuz for imports. Military analysts assess a full, sustained blockade as unlikely; partial disruption (tanker attacks, mine-laying) as the more probable threat. Each actual tanker attack adds $0.50-2.00/barrel to insurance premiums globally.

Strategic Petroleum Reserve: The Emergency Buffer

The US Strategic Petroleum Reserve holds ~370 million barrels (down from 727M at peak). Maximum release rate: 4.4 mb/d. IEA member nations collectively hold ~4.1 billion barrels in emergency stocks. During the 1991 Gulf War, coordinated IEA releases kept prices from spiking above $40/barrel. A major Hormuz disruption would likely trigger coordinated IEA releases — historically reducing prices by $5-10/barrel, but only temporarily if the disruption persists.

Global Price Transmission: How Hormuz Affects You

Oil is a globally priced commodity — a Hormuz disruption raises Brent crude prices worldwide, regardless of where your oil comes from. The US imports only ~10% of its oil from the Persian Gulf, but a $20/barrel Brent increase still adds ~$0.48/gallon to US pump prices within 2-4 weeks. European countries importing 30-45% of gas from the Gulf face both oil AND natural gas price shocks simultaneously — a double hit unlike the US.

Alternative Routes: How Much Can Be Rerouted?

• Saudi East-West Pipeline (Petroline): Capacity 7 mb/d; routes Saudi crude to Yanbu on Red Sea
• UAE ADNOC Pipeline: Capacity 1.5 mb/d; routes Emirati crude to Fujairah on Gulf of Oman
• Iraq Kirkuk-Ceyhan: Capacity 1.6 mb/d; routes Iraqi crude to Turkey's Mediterranean coast
• Total alt-route capacity: ~10.1 mb/d — leaves 10.9 mb/d with no alternative if Strait fully blocked

FAQ

Historical Oil Price Shocks: Magnitude Comparison

• 1973 Arab Oil Embargo: +300% in 5 months (from $3 to $12/barrel) — longest-lasting shock
• 1979 Iranian Revolution: +130% in 12 months (from $14 to $35/barrel)
• 1980 Iran-Iraq War: +120% (from $35 to $42/barrel) — shorter duration
• 1990 Gulf War: +100% in 3 months (from $17 to $34) — quickly reversed post-victory
• 2022 Russia-Ukraine: +65% (from $75 to $127) — retreated to $85 by year-end

How This Calculator Works

The disruption model: Daily oil lost = Hormuz flow (21 mb/d) × disruption %; Net shortfall = lost − alternative routes − SPR release; Supply shock % = net shortfall ÷ global demand; Brent price impact = supply shock % × $3.50/barrel per 1% (EIA short-run supply elasticity estimate). Gas price impact uses the EIA rule of $0.024/gallon per $1/barrel change. The model reflects short-run inelastic demand — over longer timeframes, demand destruction and supply expansion moderate price impacts.