Strait starts being blocked

Feb 28, 2026

The Strait of Hormuz, which transports approximately 25% of the world's crude oil and more than 16.5 million barrels per day, faces disruption following US and Israeli strikes on Iran and Iranian retaliatory strikes on Saturday. Some oil companies and trading houses have suspended shipments through the strategic waterway after a missile attack hit the US Fifth Fleet's service centre in Bahrain, prompting the Navy to reduce staffing to mission critical levels. Saudi Arabia and the UAE have activated contingency plans, raising oil exports and preparing to divert up to 2.6 million barrels per day through alternative pipelines to the Red Sea and Gulf of Oman. Oil prices climbed to six-month highs, with analysts estimating Brent crude could reach $80 per barrel in a material disruption or exceed $120-130 per barrel in a full blockade scenario.

Strategic importance and vulnerability of the Strait of Hormuz

▪Oil flows through the Strait of Hormuz averaged 20 million barrels per day in 2024, about 20% of global petroleum liquids consumption
▪The Strait of Hormuz connects the Gulf with the Arabian Sea
▪More than 16.5 million barrels of oil per day flow through the Strait of Hormuz
▪The UAE can bypass the Strait of Hormuz by moving ADNOC's 1.5 million barrels per day through a pipeline that ends on the Gulf of Oman coast in Fujairah
▪Saudi Arabia can divert oil shipments using the East-West Crude Oil Pipeline that links oil fields in the Eastern Province to the Red Sea port of Yanbu
▪About 2.6 million barrels per day of unused capacity from existing UAE and Saudi pipelines could be available to bypass the Strait of Hormuz

Current military situation and shipping disruptions

▪Iran launched retaliatory strikes across the region on Saturday, February 28, 2026
▪During US and Israel air strikes on Iran last June, an average of 1,000 vessels per day experienced GPS signal interference near Iranian waters
▪OPEC+ top producers Saudi Arabia and the UAE raised oil exports in recent days as part of contingency plans
▪The US Navy reduced staffing at its 5th Fleet headquarters in Bahrain to mission critical levels

Potential impact on global oil prices and markets

▪Last June, the benchmark rate for a supertanker carrying 2 million barrels of crude from the Middle East to China hit a new high during the 12-day conflict between Israel and Iran
▪Barclays estimates Brent crude could rise to around $80 per barrel in the event of a material supply disruption
▪Bloomberg Economics analysis shows oil prices tend to rise 4% for every 1% decrease in supply

Perspective of Financial analysts and banks

▪Barclays views a material supply disruption in the Strait of Hormuz as likely to push Brent crude to around $80 per barrel
▪Bloomberg Economics analysis indicates oil markets follow a pattern where prices rise 4% for every 1% decrease in supply
▪JP Morgan considers a full blockade of the Strait of Hormuz capable of driving international oil prices beyond $120-130 per barrel