Strait of Hormuz Closure Disrupts Global Oil and LNG Supply
The closure of the Strait of Hormuz has disrupted 18.4 million barrels per day of oil flow and 110 billion cubic meters of LNG trade. The crisis exposes vulnerabilities in the global energy system and highlights the urgent need for a transition to renewable energy sources.
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The Strait of Hormuz's closure has led to a reduction in global oil supply by approximately 11 million barrels per day after emergency offsets, with the International Energy Agency estimating a realized drop of eight million barrels per day in March 2026. Brent crude prices have surpassed $100 per barrel, while Asian LNG benchmark prices increased to over $25 per MMBtu.
The crisis has heavily impacted Asian markets, with countries like India and Sri Lanka experiencing significant fuel shortages. Additionally, LNG export capacity has declined due to infrastructure damage.
The report suggests that a shift toward renewable energy could mitigate future supply vulnerabilities, potentially displacing over 20% of current oil and gas demand by 2035. Prolonged high fossil fuel prices could lead to an additional $1 trillion to $2 trillion in global expenditure this year.
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