How the Strait of Hormuz closure affects global oil supply
2 days ago
- #Oil Crisis
- #Energy Supply
- #Strait of Hormuz
- The Strait of Hormuz closure disrupts 20% of global oil and LNG supply.
- Middle East oil producers like Saudi Arabia, Iraq, and Kuwait cut production due to full storage.
- Global energy system faces severe disruption with insufficient spare capacity to cover the supply gap.
- Oil prices surged to $119/barrel, highest since 2022, before a slight drop.
- Asia is highly vulnerable, relying heavily on Middle East crude and LNG imports.
- Saudi Arabia and UAE use pipelines (East-West Pipeline, ADCOP) to bypass the Strait.
- Refineries in the Gulf, like Kuwait’s Al Zour, cannot ship fuel, impacting global supply.
- Oil infrastructure attacks (e.g., Bahrain’s Sitra refinery, Saudi Aramco’s Ras Tanura) worsen disruptions.
- Shipping costs remain high due to attack risks; hundreds of ships are anchored.
- Even post-conflict, repairs and production recovery will take time, prolonging supply issues.