Brent surges, Hormuz risk back on front pages — what if flow is cut?

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.