The closure of the Strait of Hormuz by Iran is causing significant disruptions in global energy markets, with oil prices expected to surge further as a consequence. Analysts project that oil prices could escalate to over $100 per barrel if the closure persists. The global benchmark Brent crude has already risen by approximately 2.6% to around $80 per barrel, marking an almost 10% increase since the onset of the conflict.
Strategically situated between Oman and Iran, the Strait of Hormuz plays a crucial role in the global oil trade, with about 13 million barrels per day transiting the waterway in 2025, which accounted for roughly 31% of all seaborne crude flows, according to energy consulting firm Kpler. The Iranian Revolutionary Guard announced the closure on Monday, warning that any vessels attempting to navigate the strait would be targeted, leading to heightened tensions in the region.
The impact of this closure is particularly pronounced in Asia, where countries such as Thailand, India, Korea, and the Philippines are expected to feel the brunt of rising oil prices due to their heavy reliance on imported energy. Malaysia, however, may emerge better positioned as an energy exporter during this crisis, as noted by Nomura.
In South Asia, immediate disruptions in liquefied natural gas (LNG) supplies are anticipated, with Qatar and the UAE supplying nearly all of Pakistan’s, Bangladesh’s, and a large portion of India’s LNG imports. Bangladesh is already grappling with a significant structural gas deficit of over 1,300 million cubic feet per day, which compounds its vulnerability to supply interruptions. The limited storage capacity and procurement flexibility in both Pakistan and Bangladesh suggest that any disruption would likely prompt rapid demand destruction in their power sectors.
India, which heavily relies on LNG imports tied to Gulf supplies, faces a dual shock as rising crude prices would increase both oil and LNG contract costs. Approximately 60% of India’s oil imports come from the Middle East, making it particularly susceptible to fluctuations in energy import expenses.
Conversely, China, while also facing significant risks due to its energy dependency, is in a relatively more stable position due to substantial stockpiles and alternative supply routes. As the world’s largest crude oil importer, China’s access to Iranian oil accounts for more than 80% of its purchases. Approximately 30% of its LNG imports derive from Qatar and the UAE, with around 40% of its oil passing through the Strait of Hormuz.
Recent strategies by Saudi Arabia to bolster crude loadings and the existence of strategic petroleum reserves in major consuming nations, including China, may offer a temporary buffer against the escalating price competition driven by this crisis.
While the situation remains fluid, the international community is closely monitoring developments as they unfold, highlighting the critical importance of the Strait of Hormuz to global energy security. As nations navigate these challenges, there remains hope that a resolution can be achieved that stabilizes both the region and the energy markets worldwide.