Iran-US tensions: What would blocking Strait of Hormuz mean for oil, LNG?

Tensions between Iran and the US have risen, focusing attention on the Strait of Hormuz. The US is increasing its military presence in the Gulf, while Iran conducted military drills in the Strait of Hormuz, temporarily closing sections of the waterway. The Strait, located between Iran, Oman, and the UAE, is a critical chokepoint for global oil and gas supplies. Approximately 20 million barrels of oil, equating to $500 billion in annual energy trade, pass through the Strait daily. Closure of the Strait would have significant economic consequences, disrupting global energy markets.

The Strait of Hormuz, a vital shipping route connecting the Persian Gulf and the Indian Ocean, was temporarily closed by Iran during a military drill, raising concerns about potential disruptions to global trade. The strait is the only direct sea outlet for the Gulf, making it critical for oil and LNG shipments. Approximately 31% of the world's seaborne crude oil, about 13 million barrels daily, and 20% of global LNG shipments pass through it annually. The closure, the first since tensions rose between Iran and the US, caused global oil prices to increase, reaching a six-month high. The Strait's strategic importance highlights the potential impact of any prolonged blockade on the global energy market.