What Would a Disruption in the Strait of Hormuz Mean for Global Energy?

Why One Strait Matters to the Whole World

When a strait is blocked, tanker traffic changes first, followed potentially by fuel prices, flights, plastic products, and household bills. The International Energy Agency’s “IEA Oil Market Report – May 2026,” the U.S. Energy Information Administration’s “Short-Term Energy Outlook, June 2026,” the Organisation for Economic Co-operation and Development’s “OECD Economic Outlook, Volume 2026 Issue 1,” and the European Central Bank’s “Economic Bulletin, Issue 3 / 2026” each describe this transmission chain.

The four reports examine different time windows: the IEA focuses on oil supply and demand through May, the EIA extends its forecast through 2027, the OECD discusses global growth scenarios, and the ECB records how the energy shock is entering euro-area prices and economic activity. As a result, the same “disruption in the Strait of Hormuz” appears in their analyses respectively as a supply shortfall, inventory drawdown, macroeconomic pressure, and inflation risk.

Layer One: Crude Oil Disappears from the Market First

The IEA records supply changes that have already occurred: global oil supply fell to 95.10 million barrels per day in April, a cumulative decline of 12.80 million barrels since February; production in Gulf states affected by the strait’s closure was 14.40 million barrels per day below prewar levels. The IEA also notes that higher production and exports from Atlantic Basin producers can provide only partial relief and cannot immediately replace Gulf supplies at the same scale.

The shortfall did not immediately become an oil outage in every region because the market first drew on inventories. Preliminary IEA data indicate that globally observable oil inventories fell by 129 million barrels in March and by another 117 million barrels in April. In the IEA’s description, inventories serve as a buffer during the early stages of a crisis, but the oil withdrawn will still need to be replenished later.

The EIA used a later observation window in its June report: it said Middle Eastern crude production in May was already more than 11 million barrels per day below pre-conflict levels, and forecast global inventories to decline at average daily rates of 6.3 million barrels and 7.6 million barrels in the second and third quarters of 2026, respectively. This is the EIA’s forecast based on transit through the strait beginning to recover in the third quarter, not a completed inventory statistic.

Layer Two: Natural Gas Will Not Rise or Fall by the Same Amount Everywhere

The OECD argues that the shock in the Strait of Hormuz has moved beyond the crude oil market: because key facilities in places such as Qatar have been damaged, Gulf liquefied natural gas exports have stopped, and global natural gas supply is expected to be about 15% lower than previously anticipated. Liquefied natural gas is natural gas cooled into a liquid and transported by ship, so when ports, liquefaction facilities, or shipping routes are damaged, pipeline gas from other producers cannot automatically fill the gap.

The EIA offers a forecast pointing in a different direction for the U.S. market. It expects the average Henry Hub natural gas price to be $3.60 per million British thermal units in 2026 and $3.46 in 2027, while U.S. liquefied natural gas exports are projected to rise from 17 billion cubic feet per day in 2026 to 19 billion cubic feet per day in 2027. The EIA attributes this relative stability to growth in U.S. natural gas production, especially gas produced alongside crude oil extraction.

The two reports are not contradictory: the OECD discusses the loss of seaborne gas supplies globally, while the EIA describes domestic U.S. supply and demand. Together, they show that a disruption in the Strait of Hormuz could increase pressure on import markets dependent on Gulf liquefied natural gas without necessarily raising natural gas prices by the same amount in every region.

Layer Three: Having Oil Does Not Mean Having Usable Fuel

Crude oil must be processed at refineries to become diesel, jet fuel, gasoline, and petrochemical feedstocks. The IEA expects global refinery crude throughput to fall by 4.5 million barrels per day in the second quarter of 2026, to 78.7 million barrels per day, due to factors including insufficient feedstock, infrastructure damage, and export restrictions. Therefore, even if replacement crude is being shipped across oceans, refinery locations, crude grades, port capacity, and refined-product inventories will still determine whether consumers can obtain fuel promptly.

Liquefied petroleum gas illustrates this mismatch particularly clearly. The IEA records that U.S. LPG exports rose to 2.7 million barrels per day in April, accounting for 69% of global seaborne supply, while India’s April arrivals were still more than 40% below the January-to-February level. The IEA explains that alternative cargoes travel farther and terminal capacity is limited; for households that rely mainly on LPG for cooking, total global supply and whether deliveries reach local markets on time are two different things.

The OECD also extends the impact to industrial inputs such as fertilizer, helium, sulfur, and petrochemical compounds, arguing that supplies of these products associated with oil and gas production have also contracted. According to the OECD’s analysis, the shock could continue into agriculture, semiconductors, construction, and manufacturing, rather than remaining confined to prices at the pump.

Layer Four: The Energy Shock Enters Growth and Inflation

The OECD sets out two macroeconomic paths. Under the “limited-duration disruption” scenario, it expects global economic growth to fall from 3.4% in 2025 to 2.8% in 2026, before recovering to 3.1% in 2027; under the “prolonged disruption” scenario, in which supply restrictions continue through 2027, growth is projected at 2.1% in 2026 and 1.8% in 2027. These figures are scenario projections; the difference stems from assumptions about the duration of the conflict, energy prices, and financial conditions, among other factors.

The ECB provides data showing that the shock has already entered consumer prices: headline inflation in the euro area rose from 2.6% in March 2026 to 3.0% in April, energy inflation rose from 5.1% to 10.9%, while core inflation excluding energy and food fell from 2.3% to 2.2%. The ECB therefore attributes the current rebound mainly to energy and emphasizes that the longer the war continues, the more important indirect transmission and second-round effects through wages and prices become.

The ECB confirms that energy prices have already pushed up current headline inflation; the OECD estimates how growth, employment, and inflation could continue to change if supply restrictions become prolonged. The former reflects data through April, while the latter incorporates future conditions.

Why the Agencies Forecast Different Demand Declines

The IEA expects global oil demand in 2026 to fall by 0.42 million barrels per day year on year, while the EIA expects a decline of 1.10 million barrels per day. These figures cannot be treated simply as a matter of which institution is right or wrong: the IEA’s May report assumes flows through the strait gradually recover from June, while the EIA’s June report assumes recovery begins only in the third quarter, and the agencies updated their assumptions about supply shortages, prices, and government conservation measures at different times.

Both agencies believe high prices and physical shortages will reduce demand, but the IEA also records a short-term anomaly: in March, some countries saw precautionary buying as consumers filled their tanks early, fearing further price increases. The IEA considers that this buying made initial deliveries appear stronger and may have drawn demand forward from subsequent months; this remains the agency’s interpretation of the data, not a pattern proven to apply to every country.

None of the four materials can determine exactly when the strait will fully reopen, and none provides a restart date independent of political and infrastructure conditions. The IEA uses a baseline of gradual recovery from June, while the EIA uses a path in which recovery begins in the third quarter and flows do not approach pre-conflict levels until early 2027. Both timetables are modeling conditions, not event schedules.

The Answer Depends on How Long the Disruption Lasts

The reports from the four institutions show that a disruption in the Strait of Hormuz first reduces exportable crude oil and liquefied natural gas, then draws down inventories and strains refining and transport capacity, before entering inflation and growth through fuel and industrial-input prices. The IEA and EIA both treat inventories as a short-term buffer, but under its baseline scenario the EIA expects OECD liquid-fuel inventories to fall below 2.3 billion barrels by the end of 2026, equivalent to about 50 days of demand.

If transit resumes quickly, the IEA and EIA baseline paths allow supply and demand to recover gradually, although inventory replenishment would continue. If recovery is delayed, the OECD’s prolonged scenario shows that macroeconomic losses would expand substantially, while the ECB considers the risk of transmission into broader prices and economic activity to grow the longer energy prices remain elevated.

For longer-term resilience, the OECD advocates improving energy efficiency, diversifying sources of supply, and increasing investment in grids and energy storage at the same time, reducing dependence on a single import chokepoint. These reports explain how the impact could spread and show the outcomes under different recovery assumptions; they cannot determine the course of the conflict, the date the strait will reopen, or the policies governments will ultimately adopt.

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Source institutions：International Energy Agency、U.S. Energy Information Administration、OECD

This content is for reading and understanding research reports. It does not constitute investment advice or trading signals.