LONDON, July 12 — The Strait of Hormuz is a critical artery for global oil supplies. About 21 million barrels per day of oil and petroleum products transited the strait in 2023, according to the US Energy Information Administration. That is roughly a fifth of the world’s daily consumption, all squeezed through a narrow channel.
How it works as a chokepoint is simple geography, but the consequences of it closing are anything but simple. The numbers from the region tell the story of dependence.
Japan imported 3.5 million barrels per day from the region in 2022. India took 4.5 million barrels per day. South Korea imported 3.1 million barrels per day.
Those three countries alone rely on the strait for a significant share of their crude. A disruption does not just affect the tanker captain waiting to pass; it affects the price of everything moved by truck, train or ship in those economies.
History of price shocks
Past disruptions offer a grim guide. During the 1973 oil crisis, prices quadrupled. During the 1990 Gulf War, oil prices doubled to $40 per barrel.
More recently, after attacks on Saudi Aramco’s Abqaiq and Khurais facilities on September 14, 2019, oil prices surged 15% in a single day. That was a temporary hit to processing capacity, not a full closure of the strait.
The mechanism is straightforward: supply drops, demand does not, and the price jumps. Some analysts now warn that a prolonged closure of the Strait of Hormuz could push oil prices above $150 per barrel. That figure carries a grim corollary: a trigger for a global recession.
When energy costs spike sharply, they act like a tax on consumers and businesses, slowing economic activity across continents. The mechanism behind that is well understood — higher input costs reduce discretionary spending and corporate margins.
Strategic reserves and the buffer question
Countries have built buffers against exactly this scenario. The US Strategic Petroleum Reserve holds about 375 million barrels as of 2025. Japan holds 470 million barrels.
South Korea holds 213 million barrels. Those reserves are designed to be released during supply emergencies, buying time for diplomacy or alternative supply routes.
But the scale of the potential disruption matters: the strait moves roughly 21 million barrels per day. Even the largest strategic reserves would only cover a few weeks of lost flow from that single chokepoint. The question that hangs over the numbers is one of mechanism.
If the strait were blocked, tankers would have to take the long way around the Arabian Peninsula, adding weeks to voyage times and straining a tanker fleet that is already tightly scheduled. Alternative pipeline routes exist, but they do not have the capacity to replace the strait.
The science behind the risk is simple geometry and physics: a narrow channel, a lot of oil, and no easy bypass. What researchers and analysts are watching now is the interplay between political tension in the region and the global oil market’s ability to absorb a shock. The history of price spikes from Hormuz-related disruptions is clear.
The reserves are substantial but finite. The question is whether the mechanism of price discovery — the daily auction of barrels between buyers and sellers — can handle a sudden, sustained loss without breaking.
