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oil prices hormuz closure global economy

Oil and gas markets have moved on Hormuz risk well ahead of any confirmed, sustained disruption to actual physical flows, which is itself instructive: energy markets price probability and duration of disruption, not just realised supply loss. Following the reported strike on a cargo vessel transiting the strait, benchmark crude futures rose and LNG spot prices in Asia, already elevated, extended their gains, moving well beyond what the loss of a single ship's cargo would justify on its own.

• Roughly a fifth of global oil consumption transits Hormuz, giving even modest percentage disruptions an outsized effect on global balances.
• LNG buyers, particularly in Japan, South Korea and China, have limited substitution options on short notice given how contracted global LNG supply already is.
• Freight and insurance cost increases are passed through to landed fuel costs even when the underlying commodity price has not moved as much.
• Strategic petroleum reserves in major consuming countries provide a buffer of weeks, not months, against a sustained disruption.