The Strait of Hormuz: A Single Point of Failure

Roughly 20–21 million barrels of oil pass through the Strait of Hormuz every day, representing approximately 20% of global petroleum liquids consumption and around 30% of seaborne crude trade. The Gulf states bordering this corridor — Saudi Arabia, the United Arab Emirates, Kuwait, Iraq, Iran, and Qatar — collectively hold the majority of the world’s proven oil reserves and a dominant share of global LNG export capacity.

There is no adequate alternative. The East-West Pipeline across Saudi Arabia (Petroline) can carry around 5 million barrels per day, and the Habshan-Fujairah pipeline in the UAE adds limited bypass capacity. But these routes are insufficient to compensate for a full shutdown, and are themselves vulnerable to sabotage. For the first time in history the oil has stopped flowing.

Oil: The Immediate Shock

The abrupt closure of Persian Gulf oil exports will constitute the largest supply shock in the history of petroleum markets — larger in absolute terms than the 1973 Arab oil embargo or the Iranian Revolution of 1979, both of which removed far smaller volumes, if Iran maintains the blockade for a month or longer. 

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