LONDON, July 13 — A proposed 20% transit toll on oil passing through the Strait of Hormuz could push global crude prices above $100 a barrel, analysts warn, as the waterway handles roughly a fifth of the world’s daily consumption. The strait sees about 21 million barrels per day, according to the U.S. Energy Information Administration’s 2023 data — that’s 20% of global consumption.
Major customers include India, which takes 4.5 million barrels per day from the Gulf; Japan, at 2.8 million; South Korea, at 2.5 million; and China, which imported 1.5 million barrels per day from Iran in 2023, much of it via smuggling.
How the toll would work
A 20% toll on the value of crude transiting the strait would add roughly $17 per barrel to costs. As of April 21, 2025, Brent crude was trading at $85 per barrel and West Texas Intermediate at $81. Add that $17 and Brent pushes above $100.
The mechanism is straightforward: the toll acts as a direct tax on the region’s largest oil export route, and the cost gets passed to buyers. History shows how quickly such shocks hit markets.
On September 14, 2019, attacks on Saudi Aramco’s Abqaiq facility caused oil prices to spike 15% in a single day. That was a supply disruption, not a toll, but the price response was immediate and severe.
Emergency reserves and spare capacity
The United States holds the Strategic Petroleum Reserve, which contained 375 million barrels as of March 2025 — down from 638 million in 2020. That gives about 57 days of import cover. The International Energy Agency coordinates emergency stock releases among its 31 member countries, a system designed for exactly this kind of supply squeeze.
But alternative supply sources are limited. U.S. shale production reached 13.2 million barrels per day in 2024, but global spare capacity sits at only about 3 million barrels per day, mostly in Saudi Arabia.
That is not enough to replace a full disruption of the strait’s 21 million barrels per day.
What to watch next
The 1973 oil embargo, which followed the Yom Kippur War, caused prices to quadruple and tipped the global economy into recession. The current situation is different — a toll rather than an outright embargo — but the core vulnerability remains: a narrow chokepoint handling a huge share of the world’s oil. Markets will watch whether the toll is enforced, how major importers like India and Japan respond, and whether emergency reserves prove sufficient to prevent a price spiral.
