A bottleneck becomes a blockade: The closure of Hormuz has likely triggered the largest supply disruption in the history of the global oil market —trapping about 20% of global oil shipments — roughly 20 mn bbl / d — inside the Gulf. While Saudi Arabia and the UAE are scrambling to divert exports via the Red Sea and Fujairah, the US and EU are rapidly running out of shock absorbers to cushion the blow to markets and operators.

The scramble

The US is hitting a ceiling: Washington tapped its Strategic Petroleum Reserve for a 172 mn barrel — part of a wider 400 mn barrel International Energy Agency (IEA) release. However, technical limits mean only about 100 mn barrels of easily accessible US reserves remain.

In a bid to offset the Hormuz deficit, the Trump administration has issued waivers allowing the purchase of 245 mn barrels of Russian crude currently at sea. The US is running out of measures for meaningfully offsetting the compounding effect of the Hormuz closure on global market supply.

Meanwhile, the EU is opting for emergency measures: EU energy ministers met yesterday to weigh radical interventions, including gas price caps, national tax cuts, and a revision of the CO2 permit market to shield industries from costs that have surged 50% since the conflict began.

Our take

We could move from a price crisis to a supply-availability crisis. With the US Navy unable to forcibly reopen the waterway and commercial shippers unwilling to risk transit despite US financial backing, global energy logistics are gridlocked.

Domestic survival trumps trade? The disruption is now forcing regional powers to prioritize domestic survival over trade. China and Thailand have issued hard bans on refined fuel exports, a move that has left Vietnam — which imports two-thirds of its jet fuel — bracing for a total aviation freeze. With 60% of its supply cut off and secondary sources like Singapore also dwindling, Vietnamese authorities have warned airlines to prepare for drastic flight reductions starting in April.

What’s next

Can we expect forced rationing? Asia, which relies on the Middle East for some 60% of its crude, will see flows dwindle sharply in the next two weeks if the crisis persists. Governments in Japan, Thailand, and India are already cutting refinery rates and discouraging fuel use.

We’re keeping an eye on the EU Summit: Commission President Ursula von der Leyen will present a shortlist of emergency options to leaders this Thursday. We can expect a clash over state professions, as wealthier nations like Germany have deeper pockets to subsidize their way out of the crisis than less endowed member states.

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