Strait of Hormuz Closure Disrupts Oil, LNG

Following US and Israeli attacks on Iranian government, military, and nuclear facilities, Iran warned shipping away from the Strait of Hormuz. This led to insurers withdrawing coverage, effectively halting tanker movements through the strait. This disruption threatens 15% of global oil supply and 20% of global LNG supply, creating a dual supply shock. Global oil prices, including Brent Crude and US-traded oil, have already risen significantly. Experts from Wood Mackenzie, including Alan Gelder and Massimo Di Odoardo, warn that prices could exceed USD 100 per barrel if flows are not quickly re-established. The OPEC decision to increase output may be moot due to the inaccessibility of spare capacity. Alternative routes and strategic stock releases offer limited relief. The halt in LNG flows would reignite competition between Asia and Europe, with European storage levels already low. India, a major oil importer, faces increased inflation and import costs.