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Strait of Hormuz Blockade: Global Oil Markets Brace for Impact
26 Apr
Summary
- Strait of Hormuz traffic halted due to US-Israel and Iran conflict.
- Energy markets face the most significant disruption in history.
- Oil firms expect traffic normalization by August or November 2026.
Global oil markets are grappling with the most severe disruption in their history following a near-complete halt in traffic through the Strait of Hormuz. This critical energy chokepoint, vital for global oil and gas trade, has been affected by escalating hostilities between the US-Israel and Iran, which began on February 28, 2026. Oilfield services major Baker Hughes and the Federal Reserve Bank of Dallas survey indicates that 39% of oil and gas companies expect traffic to normalize by August 2026, with another 26% anticipating this by November 2026.
However, the International Energy Agency (IEA) presents a different outlook, forecasting a gradual resumption of flows from May 2026 in its base case scenario. The IEA's report also highlights the potential for prolonged disruptions, warning of persistent deficits and significant price increases if Middle East energy production remains restricted. Many oil and gas executives surveyed by the Dallas Fed also believe future disruptions to the Strait of Hormuz are likely, with 48% deeming it 'very likely' that geopolitical events will cause further interruptions within the next five years.
