A blockade of the Strait of Hormuz would drain global oil inventories below 100 days of demand cover, a threshold that analysts treat as a critical buffer for market stability. The warning underscores how exposed the world remains to a single chokepoint that carries roughly one-fifth of all oil traded globally.

The Strait of Hormuz is a narrow waterway between Iran and Oman. It is the only sea route out of the Persian Gulf, meaning crude from Saudi Arabia, Iraq, the UAE, Kuwait, and Iran itself all passes through it. There is no realistic short-term alternative for most of that volume. Overland pipelines and alternative routes exist but can absorb only a fraction of the flow.

Why 100 Days Matters

Oil-consuming nations and the International Energy Agency use days-of-demand cover as a standard gauge of energy security. Keeping inventories above 90 to 100 days is generally considered the floor for absorbing supply shocks without triggering severe price spikes or rationing. Falling below that level signals the market is drawing down reserves faster than it can replenish them, which historically pushes prices sharply higher and forces emergency releases from strategic reserves.

The United States, its allies, and the IEA member countries collectively hold strategic petroleum reserves specifically to buffer against events like a Hormuz closure. But those reserves are finite. A prolonged blockade lasting weeks or months would test their depth quickly, especially if producing nations inside the Gulf cannot export at all during the disruption.

The countries most exposed are those in Asia, particularly China, Japan, South Korea, and India, which collectively import enormous volumes of Gulf crude with limited ability to quickly reroute supply. Europe has more diverse sources but is not immune. The US, now a net oil exporter, faces less direct exposure but would still feel the impact through global price contagion.

What Changes Next

A blockade scenario raises the floor for oil prices immediately, even before physical supply actually falls, because traders price in the risk premium. Shipping insurance costs rise sharply for any vessel attempting the Strait. Tanker owners may refuse routes entirely, compounding the physical supply drop with a logistical freeze.

Refinery margins would come under pressure as lighter Gulf crudes, which many Asian refineries are specifically configured to process, become unavailable. Switching to alternative crude grades requires refinery adjustments that take time, meaning the supply shock would translate into product shortages, not just crude shortages, within weeks.

Governments would likely accelerate coordinated strategic reserve releases, as happened after Russia's invasion of Ukraine in 2022. The IEA authorized 60 million barrels in releases that year, and a Hormuz blockade would almost certainly trigger a larger, faster response. Whether that would be enough to hold inventories above 100 days of demand depends entirely on the duration of the disruption.

Energy markets are already sensitive to Middle East tensions following recent conflicts involving Iran-backed groups and Israeli military operations across the region. A formal blockade, even a partial or contested one, would represent a significant escalation beyond anything seen in recent years and would test diplomatic and military responses from the US and its Gulf allies simultaneously.

For businesses, the immediate read-through is higher energy input costs across manufacturing, transportation, and chemicals. For consumers, fuel prices would rise quickly. The longer the disruption, the more pressure builds on central banks already navigating inflation risk.