LONDON, July 11 — The potential closure of the Strait of Hormuz is threatening to upend global oil markets that were already on shaky ground in 2025. For the average person, think of it like this: the Strait is the world’s most important oil chokepoint, and shutting it would be like cutting the main fuel line to the global economy.
Here’s what’s happening with prices. In 2023, Brent crude oil averaged $82 per barrel, according to the U.S. Energy Information Administration. After the April 28 announcement of the potential closure, Brent crude futures jumped 5% to $89 per barrel in early trading. That is a developing figure, but it already signals how jittery markets are.
To put that spike in context, previous disruptions offer a stark comparison. The 2019 attacks on Saudi Aramco’s Abqaiq and Khurais facilities—two of the world’s largest oil processing plants—caused a 15% spike in prices. The current 5% rise is significant, but it has not yet reached those panic levels. The practical upshot: traders are pricing in risk, but not full-blown catastrophe—yet.
Strategic reserves and the Iran factor
The U.S. has a card to play. The Strategic Petroleum Reserve held 375 million barrels as of March 2025, and it could be tapped to stabilize markets if supply gets squeezed. That is a familiar tool; presidents have used it before during hurricanes and geopolitical shocks. On a broader scale, the International Energy Agency coordinates emergency stockpiles among its member nations, totaling 1.5 billion barrels. That is a substantial cushion, but it is not infinite.
Iran’s role in this is critical. Its oil exports averaged 1.5 million barrels per day in 2023, down from 2.5 million barrels per day before 2018 sanctions were reimposed. A Strait closure would halt those exports entirely. In plain terms, that removes a significant chunk of supply from a market that is already nervous.
Beyond the barrel: insurance and inflation
The effects would not stop at the oil price itself. During the 2019 tensions in the region, insurance rates for tankers rose 10-fold. That same dynamic could return, making it far more expensive to ship oil even if the Strait remains partially open. Those costs get passed down the chain.
Here’s the bigger picture for American wallets. Oil is traded in U.S. dollars, so any price increase directly impacts global inflation. The Federal Reserve has been targeting a 2% inflation rate in 2025. A sustained rise in energy costs would make that target much harder to hit, potentially forcing the Fed to keep interest rates higher for longer. That is the kind of ripple effect that moves from commodity markets to mortgage rates.
What to watch next: whether the U.S. taps the Strategic Petroleum Reserve, and whether the IEA coordinates a release among member nations. Also watch the insurance market for tankers—that number will tell you how serious the shipping industry thinks the threat is. For now, the 5% price jump is a warning shot, not the full crisis.
Sources
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