Impact of Strait of Hormuz Closure on Global Energy Markets
Will reopening Hormuz quickly reverse damage from near three-month closure?
Image: Gulf News
The reopening of the Strait of Hormuz may stabilize energy markets temporarily, but analysts warn that the economic and supply disruptions from its nearly three-month closure could have lasting effects. With over 11 million barrels per day of Gulf crude production curtailed, the repercussions on energy prices and global growth are expected to persist even after shipping resumes.
- 01Wood Mackenzie estimates that over 80 million tonnes of liquefied natural gas (LNG) supply remains inaccessible due to the closure.
- 02The consultancy predicts that Brent crude prices could stabilize around $80 per barrel by the end of 2026.
- 03Analysts emphasize that inflation concerns are rising as energy costs impact logistics and transport markets.
- 04The 'Quick Peace' scenario suggests a potential return to pre-conflict economic conditions by 2026, but LNG markets may remain tight until 2027.
- 05Long-term shifts could lead to reduced hydrocarbon dependence in Europe and Asia, accelerating investments in electrification and renewable energy.
Advertisement
In-Article Ad
The Strait of Hormuz, a vital oil shipping route, has faced nearly three months of closure, prompting significant concerns in global energy markets. U.S. President Donald Trump announced that a deal with Iran is in the works, potentially allowing for the reopening of this crucial waterway. However, analysts caution that the economic and supply disruptions caused by the closure may linger long after shipping resumes. According to Wood Mackenzie, over 11 million barrels per day of Gulf crude production remains curtailed, alongside 80 million tonnes of liquefied natural gas (LNG) supply that is currently inaccessible. The consultancy's report outlines various scenarios, including a 'Quick Peace' that could see the Strait reopened by June, yet even this would not eliminate the strain on energy markets immediately. Brent crude prices are expected to ease to around $80 per barrel by the end of 2026, but inflation fears persist as higher energy costs impact logistics and transport. Furthermore, prolonged uncertainty may accelerate structural shifts in energy markets, leading countries to invest more in renewable energy and reduce their reliance on hydrocarbons.
Advertisement
In-Article Ad
The closure and potential reopening of the Strait of Hormuz have significant implications for energy prices, inflation, and global economic growth, affecting consumers and industries reliant on stable energy supplies.
Advertisement
In-Article Ad
Reader Poll
How do you think the closure of the Strait of Hormuz will affect global energy prices?
Connecting to poll...
Read the original article
Visit the source for the complete story.