The Strait of Hormuz has been effectively closed for nine weeks, and the oil flowing through it has dropped by at least 10%, removing roughly a billion barrels from global supply — more than double the emergency stocks released by governments when the conflict began in late February.
That loss is being absorbed for now by drawing down inventories and paying premiums to secure what remains available, but traders warn the buffer is vanishing prompt. As the closure drags into its third month, the initial shock to petrochemical plants in Asia and liquefied petroleum gas shipments to India is spreading westward, showing up in flight cuts across Europe and the United States and in weakening demand for gasoline and diesel as prices climb.
Global oil demand is on track to fall more sharply this month than in any single month over the past five years, according to the International Energy Agency, which helped coordinate the emergency response. The adjustment is no longer theoretical; it is already happening in sectors that do not show up on benchmark price screens, said Saad Rahim, chief economist at Trafigura Group, speaking at the FT Commodities Global Summit in Lausanne.
How insurers and energy firms are pricing in a prolonged shutdown
Baker Hughes is guiding its financial outlook on the assumption that the Strait will not fully reopen until the second half of 2026, with its chief financial officer telling investors the company is preparing for the U.S.-Iran conflict to continue through the complete of June. That view is widely shared: a Federal Reserve Bank of Dallas survey of nearly 100 oil and gas executives found almost 80% believe the waterway will remain closed until August or later, and more than 80% see future disruptions as likely or exceptionally likely.
The closure has already cut 10% of global oil volumes and taken 20% of worldwide liquefied natural gas supplies offline, according to Baker Hughes CEO Lorenzo Simonelli, who described geopolitical risk as now a “structural reality” for energy markets. The firm expects this to embed persistent risk premiums into both oil and LNG pricing for the foreseeable future.
Why everyday consumers are starting to feel the pinch
The initial impact hit refineries and chemical plants reliant on Gulf crude, but as stocks dwindle, the effect is moving into consumer-facing sectors. Airlines in Europe and the United States have begun cutting thousands of flights. In the United States, analysts warn gasoline demand could weaken as prices approach $4 a gallon, with diesel — used to power trucks, trains and construction equipment — also showing signs of strain.
For more on this story, see US Military: No Ships Broke Iran’s Strait of Hormuz Blockade.
Germany has halved its economic growth forecast for the year, and the International Monetary Fund has trimmed its global outlook, citing the war as a drag. In the European Central Bank’s most severe scenario, Brent crude could spike to $145 a barrel, cutting eurozone growth in half. On Friday, Brent closed near $105.
What a full-year closure would mean for the global economy
If the Strait remains shut for a full year, the consequences would extend far beyond energy markets, Forbes notes. Roughly 20% of the world’s crude oil moves through the waterway, and since oil makes up about a third of global energy production, the disruption touches a significant share of the world’s total energy supply — enough to trigger a worldwide recession that would include the United States.
The core issue is not price but volume: less energy would be available to consume, regardless of how it is allocated. History offers a parallel — during World War II, nations used ration coupons to manage scarcity. Today, the mechanism might be higher prices forcing conservation, or direct government intervention to curb use. Either way, the adjustment would ripple through economies: consumers spending more on fuel would have less for cars, clothing or vacations, while businesses would weigh how much of their rising energy costs they can pass on before demand for their products falls.
This follows our earlier report, US Blockades Strait of Hormuz Following Failed Nuclear Talks With Iran.
Some shifts would be subtle but widespread. As petroleum-based plastics grow costlier, alternatives like lumber could gain appeal for home projects — a small example of how energy shocks reweight everyday choices far from the pump or the refinery.
How long could the Strait remain closed?
Baker Hughes is assuming in its financial guidance that the Strait will not fully reopen until the second half of 2026, and a Dallas Fed survey found nearly 80% of energy executives expect it to stay closed until August or later.
How are consumers likely to respond to higher fuel prices?
Consumers may cut back on driving, opt for more efficient vehicles or shift spending away from discretionary goods like vacations and recent cars toward essentials, though the exact response depends on price levels and availability of alternatives.
Could the closure trigger a recession in the United States?
Yes — Forbes notes that a long-term closure would trigger a worldwide recession that would include the United States, due to the Strait’s role in global energy flows and the resulting drop in available energy for consumption.
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