Introduction

Recent volatility in oil markets has been driven by a simple but critical problem: the movement of oil, not the production of it. While global supply capacity has not collapsed, the ability to transport crude through one of the world's most important energy chokepoints has been severely disrupted. The Strait of Hormuz handles a significant share of global oil flows, and the current conflict in the region has turned this narrow waterway into the focal point of market anxiety. As a result, oil prices are rising not because the world has run out of oil, but because the system that moves it is under threat.

It's Transportation, Not Production

The key to normalising oil prices appears to be the restoration of safe shipping through the Strait of Hormuz. For now, however, the waterway remains effectively blocked, and it is unclear how long it will take for transit to return to normal.

Compounding the problem, there is no clear strategy to open the Strait, adding to market anxiety and pushing oil prices higher as supply routes appear increasingly fragile. To be clear, this is not primarily a production issue but a transportation one. Oil may exist in sufficient quantities, but it has little value to markets if it cannot be moved.

Traversing the Strait is Dangerous

The situation remains dangerous. Three commercial vessels have reportedly been struck by projectiles, and there are concerns that mines may have been deployed in the Strait.

The disruption in the Strait has effectively taken around 20 million barrels of oil per day out of circulation. As a result, Brent crude has surged and is now threatening to break above $100 per barrel. On Monday it briefly approached $120 before pulling back below the key $100 level.

How Long Will It Be Closed?

The central risk now is how long the Strait remains effectively closed. The longer the disruption lasts, the longer supply is constrained and the greater the upward pressure on oil prices. Some market participants are already discussing scenarios where crude could approach $200 per barrel. If prices were to rise that sharply, the impact would likely begin to erode demand and place meaningful strain on the global economy.

Governments and energy agencies have already begun responding. The International Energy Agency (IEA) has coordinated the largest emergency release of oil reserves in history, with member countries agreeing to release around 400 million barrels from strategic stockpiles to help stabilise markets. In addition, Saudi Arabia is exploring the use of alternative pipelines to move oil to the Red Sea.

It Will Be Difficult to Open

Even so, the oil market remains under significant strain, and reopening the Strait appears to be the only real path to normalising conditions. Achieving that, however, is far from straightforward.

At its narrowest point, the Strait is just 33 kilometres wide. Because Iran controls much of the surrounding coastline and nearby islands overlooking the shipping lanes, it can make the passage extremely dangerous through the use of missiles, mines, drones, and artillery. That threat alone may be enough to deter commercial vessels from transiting the route. Beyond the physical risks, tanker operators may also struggle to secure war-risk insurance, further discouraging traffic through the Strait.

There has been discussion about naval forces escorting commercial vessels through the Strait, but the details remain unclear. The key question is whether the threat to shipping can be managed, and at present the answer appears to be no. The risks remain high, even for potential naval escorts.

The fact that Iran can make the passage dangerous for commercial traffic appears to give it a powerful psychological advantage, effectively shutting down transit through the Strait of Hormuz. At the moment, there does not appear to be a clear way to counter that deterrent effect.

The Length of the Conflict

Thus, the duration of the conflict becomes a critical factor. With no obvious solution to guarantee safe transit through the Strait, the longer the war continues, the longer the Strait of Hormuz is likely to remain constrained, and the greater the pressure on global oil markets.
And, of course, the higher oil prices rise, the greater the potential economic toll.

Conclusion

In the end, the oil market is confronting a simple but powerful reality. The world may have enough oil, but supply only matters if it can reach consumers. As long as the Strait of Hormuz remains effectively closed or too dangerous for commercial shipping, a critical artery of the global energy system will remain under strain. That means volatility in oil prices is likely to persist, and the longer the disruption lasts, the greater the economic consequences will become. Until safe passage through the Strait is restored, the global oil market will remain vulnerable to a conflict that has turned transportation, rather than production, into the defining risk.