COMPETITIVE · MARKET STRUCTURE · EUROPE
Strait of Hormuz closure halts 20% of oil/LNG
Change
The effective closure of the Strait of Hormuz has stopped the passage of 20% of the world's oil and liquefied natural gas.
Why it matters
The effective closure of the Strait of Hormuz has stopped about 20% of global oil and liquefied natural gas shipments. Ongoing strikes have damaged gas fields, oil refineries, and terminals, with industry representatives saying repairs will take years. Approximately 400 million barrels—about four days of world supply—have been removed from the market, with prices up roughly 50%. Jet fuel in Europe reached about $220 per barrel, and U.S. retail gasoline prices rose by more than $1 per gallon to around $4 since February 28.
Implications
- · Higher jet fuel costs increase airline operating expenses and push airfares upward.
- · Retail gasoline prices rise for consumers as pump prices increase.
- · Reduced throughput through the Hormuz choke point constrains global crude and LNG distribution capacity.
- · Damage to production and refining infrastructure will constrain supply while repairs progress.
Who is affected
- · Airlines and air carriers
- · Oil and gas producers and refiners
- · Energy and commodity traders
- · End consumers and motorists
Source
Topics
Business & Markets Markets Supply Chain & Logistics Energy & Power Oil & Gas