The disruption in tanker traffic through the Strait of Hormuz represents the largest disruption to global oil production ever recorded, according to Daniel Yergin, Vice Chairman of S&P Global. Yergin made the assessment in a March 9 opinion piece published on LinkedIn, where he examined the impact of the ongoing Iran conflict on global energy flows.
“Right now, the world is looking at the biggest disruption in oil production in history as well as a resounding shock to global gas markets,” Yergin wrote.
He said the Strait of Hormuz has become a central pressure point in the conflict because of the volume of energy supplies that normally move through the narrow waterway between the Persian Gulf and the Gulf of Oman. According to Yergin, about 20% of the world’s oil normally travels through the Strait. He also said nearly the same share of global liquefied natural gas shipments passes through the route.
“On any given day, as many as 90 tankers could usually be seen sailing through the Strait. Now there are virtually none,” he said.
Security risks have increased across the Gulf, according to Yergin, with commercial shipping facing multiple threats. He added, “The threat of attack by weaponised Iranian speedboats remains.”
He also noted that insurance coverage for vessels operating in the region remains active but said operators now face steep war-risk premiums. Yergin said the disruption has already pushed global energy prices higher.
“As of Friday morning, the Brent crude oil benchmark was up about 50% from where it was before the US military build-up began in the Gulf,” he wrote. “Asian spot LNG prices have almost doubled since the war began and the European natural gas price is up about 50%, which puts new pressure on Europe’s economy,” Yergin stated.
Despite the scale of the disruption, Yergin said global energy supply systems today are more diversified than in previous decades.
And Yergin said the scale and duration of the conflict will determine how long global energy markets remain under pressure.
“The key question for global energy markets now is the duration of this explosive war,” he noted.
On March 6, Reuters reported that the number of daily tankers passing through the Strait dropped to zero as of March 4 from 37 on February 27, the day before the U.S. and Israel launched their first attacks on Iran.
Reports coming out of the Middle East have, in the past two days, cited maritime tracking systems and shipping analysts, reporting that on March 6–7, around eight commercial vessels per day managed to pass through the strategic waterway, compared with more than 130 vessels daily under normal conditions.
