The Strait of Hormuz Crisis, Explained: Energy, Shipping and Supply Chain Impact

Situation Briefing. Updated September 13, 2026. Day 198 of the Iran war.

The Strait of Hormuz is a passage roughly 21 miles wide at its narrowest, connecting the Persian Gulf to the Gulf of Oman. Before February 2026 it carried about 20 million barrels per day of crude, condensate and petroleum products, close to 20 percent of global petroleum liquids consumption, plus about one-fifth of the world's liquefied natural gas trade, according to the U.S. Energy Information Administration.

On February 28, 2026, the United States and Israel launched an air campaign against Iran. The Islamic Revolutionary Guard Corps responded by forbidding passage, boarding and attacking merchant vessels, and laying sea mines, per the Congressional Research Service. Between March 1 and March 8, IMF PortWatch recorded an average of six ships a day against roughly 100 in February. Brent rose from $71 a barrel on February 27 to $94 by March 9, per the EIA, and later peaked near $120. The IEA has called it the largest supply disruption in the history of the oil market.

Iran did not impose a uniform blockade. It built a permissions regime. Vessels linked to Iran, to the dark fleet, or flying flags Tehran did not consider hostile were routed along a narrow corridor by the Iranian coast under IRGC monitoring. Ships from Pakistan and Iraq were permitted, and Iran reportedly charged fees.

That distinction is the reason this has resisted a military solution for six months. Iran did not close the strait. It appointed itself the gatekeeper of the strait, which is a claim to sovereignty rather than an act of denial, and mine clearance does nothing to dislodge a claim.

This is the part with the most commercial consequence, and it is consistently misread.

Saudi Arabia's East-West pipeline runs about 750 miles from Abqaiq on the Gulf coast to Yanbu on the Red Sea. It reached its full 7 million barrel per day capacity in late March, with roughly 5 million barrels a day of crude exported through Yanbu, Bloomberg reported. The UAE's Abu Dhabi Crude Oil Pipeline moves about 1.5 million barrels a day from Habshan to Fujairah.

The IEA puts combined available bypass capacity at 3.5 to 5.5 million barrels per day against the 20 million that normally transit. Iraq, Kuwait and Qatar have no comparable alternative at all. Even on optimistic assumptions, roughly two-thirds of Gulf crude exports remain physically dependent on the strait.

And the bypass carries its own exposure. Iran struck the East-West line in April, cutting throughput by about 700,000 barrels a day. Fujairah's export terminal came under drone attack. On September 11, Saudi Arabia shut the East-West pipeline entirely as a precaution after Houthi attacks on energy facilities at Abha, Najran and Jazan.

A tanker can reroute in hours. A pumping station cannot. Pipelines convert a mobile risk into a fixed one, which is why the seven bypass projects now under construction or consideration across the Gulf will reduce the exposure without ever eliminating it. Goldman Sachs estimates that build-out could cover more than 60 percent of pre-war Gulf export volume by the end of 2028.

QatarEnergy declared force majeure on March 4. On March 19, Iranian missiles struck Ras Laffan, the world's largest LNG export complex, damaging two liquefaction trains and taking roughly 17 percent of Qatar's export capacity offline. The closure removed more than 10 billion cubic feet per day of global LNG supply, about 20 percent of the world total.

By late August, Qatari LNG exports had fallen roughly 96 percent, with 18 cargoes shipped against 509 in the comparable period a year earlier and an estimated $24 billion in lost revenue.

Oil can be replaced from elsewhere given time and price. Liquefaction capacity cannot. Damaged trains take years, and Qatar's planned expansion, which was meant to give Europe a genuine alternative to American gas, is now delayed or partly cancelled. Chatham House has argued that a reopening will not undo this, because Gulf LNG now carries a permanent risk premium and European dependence on US supply deepens accordingly.

A strike that lasted minutes reshaped the European gas supply mix for a decade.

About 80 percent of the oil and close to 90 percent of the LNG transiting Hormuz was destined for Asia. China, India, Japan and South Korea accounted for roughly 69 percent of crude flows through the strait.

The response has been governmental rather than commercial. The Asian Development Bank projected regional GDP growth falling 0.7 percentage points in 2026 with inflation above 5 percent, per Brookings. The Philippines declared a national emergency. Malaysia and Indonesia cut civil service workweeks, Vietnam reduced flights, South Korea imposed license plate driving restrictions, Cambodia closed roughly a third of its petrol stations, and Indonesia and Sri Lanka capped daily fuel purchases, according to ORF Middle East.

Refined products moved harder than crude. Singapore gasoil rose 57 percent and jet fuel 114 percent, a multiplier that hits freight and agriculture long before it reaches a headline oil price. War risk insurance went from about 0.125 percent of hull value before the crisis to as much as 2.5 to 5 percent at the peak, millions of dollars for a single very large crude carrier transit, easing since toward roughly 1 percent. Container lines suspended Gulf transits and rerouted via the Cape of Good Hope, adding roughly 3,800 nautical miles and 10 to 14 days.

Then the input nobody prices until it is missing. South Asia sources 34 percent of its fertilizer imports from the Middle East. Urea, naphtha and helium move through the same water. A chokepoint closure in the Gulf becomes a crop yield problem in Punjab two seasons later, through a chain no energy model captures and no central bank can offset.

Iran wants the closure to function as leverage rather than a permanent state, and wants recognition of its sovereign right to administer and charge for passage. That second prize is the larger one. It converts a temporary weapon into permanent structural power.

The United States has run military clearance and economic strangulation in parallel. CENTCOM announced in late August that it had cleared Iranian mines from international lanes, then struck Larak Island, and has spent September destroying Iranian oil tankers. The structural problem is that clearing mines does not reopen a strait. Traffic returns when underwriters believe transit is survivable, and every exchange of fire destroys that belief.

Israel was not a party to the Islamabad Memorandum and has continued operations in Lebanon regardless of it. Those operations have twice given Iran grounds to reverse a partial reopening, which makes Israeli freedom of action a binding constraint on the waterway.

Saudi Arabia and the UAE have partial exits and are discovering the exits have their own doors. Qatar has no pipeline alternative and is the clearest loser. Oman, as the other littoral state, has become the only party Iran will negotiate administration with, converting decades of cultivated neutrality into real structural power.

China has called for reopening and otherwise stayed out. A prolonged crisis that drains American military resources, inflames American inflation before midterm elections and demonstrates the fragility of US-guaranteed sea lanes serves Beijing at no cost. Restraint here is a position, not an absence of one.

The Houthis have expanded the war rather than joined it, striking Saudi energy infrastructure and taking Mocha, Dhubab and Perim Island in the Bab el-Mandeb strait. This is the most under-priced development in the crisis. The Red Sea is the escape route for the Saudi bypass, and a force positioned on both the Bab el-Mandeb approach and the Saudi southern border can threaten the alternative to Hormuz and Hormuz-adjacent supply at the same time.

The Islamabad Memorandum, signed June 17 with Pakistani mediation, remains the reference document for every party despite being treated as defunct before it expired in August. It committed Iran to safe passage without charge for 60 days and demining within 30, committed the United States and partners to a development plan worth at least $300 billion, and directed Iran and Oman to define the future administration of the strait, per the published text.

It collapsed within days. Israel continued strikes in southern Lebanon and Iran closed the strait again, citing those strikes as a violation. The pattern since has been consistent: partial reopening, incident, reversal.

In early September the United States destroyed five Iranian crude carriers after IRGC missile launches at a US warship, Iran struck a US base in Jordan, and the Houthis attacked southern Saudi cities, wounding 73 people. Brent closed at $101.21 on September 9, the highest since May 22, rose toward $110 on September 10, and settled near $104 to $105, up about nine percent on the week, per Trading Economics. The EIA's September outlook forecasts Brent averaging around $90 for the second half of 2026 and does not expect Middle East production to recover to pre-conflict levels until the second quarter of 2027, with global inventories already down some 400 million barrels this year.

The live diplomatic track runs through Muscat, where Iranian and Omani officials are presenting a proposed system of temporary commercial shipping lanes to Gulf states, with GCC diplomats meeting their Iranian counterpart to discuss a temporary management arrangement.

A negotiated corridor is the most likely near-term outcome. It would restore a fraction of pre-war volume under conditions that leave Iran holding the valve, and compress the risk premium only modestly. Watch whether GCC states endorse the Muscat framework and whether Washington accepts any arrangement formalizing an Iranian administrative role.

Continued attrition is the base case if that fails. The tanker-for-tanker exchange can run indefinitely because neither side's core interest is threatened by it. Brent holds in the $95 to $115 range, Asian rationing hardens into standing policy, and the durable damage accrues in liquefaction capacity and investment plans rather than headlines.

The escalation path runs through Yemen, not Iran. Simultaneous pressure on Hormuz and Bab el-Mandeb would close the Saudi bypass at both ends and remove the one factor keeping prices below crisis levels. Bab el-Mandeb traffic was still near normal in early September at around 28 commodity vessels a day. That number matters more than any Hormuz transit count.

A genuine reopening requires something no current track provides: a settlement Israel is party to. Any agreement that does not bind Israeli action has a built-in failure mode, and every actor in the region knows it.

The strait will probably reopen. The assumption that made it safe will not. For four decades, global energy infrastructure was built on the belief that Hormuz could not close because closing it would hurt the closer too much. That belief was tested and it failed, and every barrel, pipeline route and liquefaction contract signed from here forward will be priced by people who watched it fail.

The chokepoint was never the water. It was the confidence.

This Situation Briefing is updated monthly. Last revised September 13, 2026.