On a normal day, roughly 100 cargo-carrying vessels pass through the Strait of Hormuz. Tankers, LNG carriers, bulk freighters — a slow, dense procession threading through a channel barely 21 miles wide at its narrowest point, connecting the Persian Gulf to the Arabian Sea and, from there, to the rest of the world. For decades, that traffic was one of the most reliable constants in global commerce. Whatever else was happening in the Middle East — wars, sanctions, diplomatic breakdowns — the oil kept moving.
It is not moving now. Not normally, anyway.
According to shipping data compiled by Kpler, only seven vessels transited the Strait of Hormuz on a single day last Friday. Four more followed over the weekend. Out of a hundred. The channel that handles roughly a fifth of the world's daily oil supply and nearly a quarter of its seaborne LNG trade has been reduced, in the words of Kpler commodity research director Matt Smith, to "exceptionally depleted" traffic levels — and has been for 94 days.
The Strait of Hormuz has been a chokepoint in the imagination of energy analysts for decades. Now, for the first time in history, it actually is one.
How It Started: February 28 and the Day the Lights Went Out
The crisis began not with a slow escalation but with a single night. On February 28, 2026, the United States and Israel launched coordinated military strikes against Iran — targeting nuclear infrastructure, military command facilities, and air defense systems in what became the most significant direct military confrontation between Western forces and Tehran since the Islamic Revolution. Within 48 hours, Iran's Islamic Revolutionary Guard Corps announced the effective closure of the Strait of Hormuz to commercial traffic. It was not a physical blockade in the traditional sense. There were no chains across the water. What Tehran deployed instead was something more effective: a combination of direct attacks on vessels attempting transit, credible threats of further attacks, and the withdrawal of any guarantee of safe passage.
The response from the shipping industry was immediate and nearly total. Maersk, MSC, CMA CGM, and Hapag-Lloyd — the four companies that collectively operate a significant share of the world's container capacity — suspended transits within days. Protection and indemnity insurance, the coverage that makes commercial shipping financially viable, was cancelled for the region from March 5. Over 150 tankers anchored outside the strait rather than attempt passage. The Strait of Hormuz was not physically blocked. It was commercially unnavigable, which amounted to the same thing.
Then the Houthis, who had been largely quiet since a Yemen ceasefire brokered in October 2025, seized the moment and resumed attacks on Red Sea shipping. For the first time in modern history, both of the Middle East's two great maritime corridors were simultaneously shut. The energy world had drilled for this scenario in strategy documents and risk analyses. Now it was real.
The Price of Closure: From $64 to $138 in Six Weeks
The numbers tell the story clearly enough. Brent crude averaged $64 per barrel in February 2026 — comfortably within the range that analysts had projected for the year, underpinned by a pre-existing global supply surplus that the IEA had estimated at 3.7 million barrels per day. J.P. Morgan's published forecast for the full year was around $60 per barrel. The energy market, on the eve of the war, was oversupplied.
By March 2, the day the IRGC formally confirmed the closure, Brent had surged 8% to approach $79. By the end of March it had crossed $100. On April 7, it hit $138 per barrel — the highest level since the immediate post-COVID era — as the full scale of supply disruption became undeniable. OPEC output had contracted by approximately 7 million barrels per day from its recent levels, according to Grand View Research data. The IEA described the situation as the largest supply disruption in the recorded history of the global oil market.
The disruption cascaded through every corner of the energy system and well beyond it. European gas prices surged as the continent scrambled for LNG that could no longer transit through the Gulf. Saudi Aramco temporarily halted operations at its Ras Tanura refinery, the kingdom's largest, after a drone attack. The ECB, which had been on a gentle easing trajectory, found its entire inflation forecast rewritten by a single geopolitical event. Eurozone energy prices were up nearly 11% year-on-year by May. That is not a market-driven phenomenon. That is the price of a choke.
The Workarounds: Saudi Pipelines, Cape Routes, and the Limits of Improvisation
The global energy system has not simply sat still. It has adapted, rerouted, and scrambled — and the adaptations are genuinely impressive, even if they fall well short of replacing what was lost.
Saudi Arabia's most significant contribution has been its East-West Pipeline — the Petroline — a twin-pipe system built four decades ago precisely for this contingency, running more than 1,200 kilometers from the Abqaiq oil fields in the Eastern Province to the Red Sea port of Yanbu. When the Strait closed, Saudi Aramco moved quickly. By mid-March, the pipeline was running at double its pre-war utilization rate. By late March, it had hit its technical maximum of 7 million barrels per day — a milestone that Aramco CEO Amin Nasser publicly confirmed and that represented an extraordinary logistical achievement under pressure. Crude exports from Yanbu more than tripled from their typical range of 1.2 to 1.4 million barrels per day. Flotillas of tankers redirected to the Red Sea port to collect oil that had previously moved through the Gulf.
The problem is that 7 million barrels per day, while impressive, is not 20 million barrels per day. Saudi Arabia's Petroline can handle Saudi crude. It cannot handle Iraq's exports, Kuwait's, Qatar's, or Bahrain's. Those countries are geographically locked to Hormuz transit — their export infrastructure has no equivalent deep-water alternative. Iraq's southern terminals at Basra, Kuwait's Mina Al Ahmadi complex, Qatar's Ras Laffan LNG facility — all of them empty into the Persian Gulf with nowhere else to go. The pipeline buys time for Saudi Arabia and its largest customers. It does not solve the problem for the broader region.
For container shipping and general cargo, the world has effectively defaulted to the Cape of Good Hope — the route around the southern tip of Africa that was last a primary shipping lane in the era before the Suez Canal. Roughly 90% of container shipping capacity that previously transited the Red Sea has rerouted to the Cape. The detour adds 3,500 to 4,000 nautical miles and 10 to 14 additional days to voyage times on Asia-Europe and Asia-Middle East lanes. Freight rates on Cape-routed vessels have risen sharply as demand for available capacity surges against a fixed fleet size. Supply chains that had spent years optimizing for just-in-time delivery are absorbing delays measured in weeks.
The Suez Canal, which had been recovering toward something approaching normal throughput after years of Houthi disruption, has largely emptied again. Egypt's canal authority has offered discounted transit fees to try to attract vessels back. The discounts have not worked. Shipping operators who have redesigned their networks for Cape routing are not changing back for a fee reduction — particularly not when the security situation in the northern Red Sea remains unresolved.
The Diplomacy: Close, But Not There Yet
As of this week, the war is in its fourth month and its diplomatic status is, depending on your level of optimism, either a fragile holding pattern or the early stages of resolution. The facts are as follows.
The original ceasefire, brokered by Pakistan in early April after weeks of escalating ultimatums, threats of attacking Iranian energy infrastructure and bridges, and deadlines that came and went, has held with imperfect consistency. It has been extended multiple times. U.S. forces have exchanged fire with Iranian assets at least once since the ceasefire's nominal commencement — including an engagement involving Iranian oil tankers in the Strait — and a cargo vessel in the northern Persian Gulf was struck by an unknown projectile as recently as Monday, the International Maritime Organization's latest tally putting the toll at 39 vessel strikes and 11 deaths since the war began.
The most significant diplomatic development came on May 28, when U.S. and Iranian negotiators reportedly reached a preliminary memorandum of understanding that would extend the ceasefire for 60 days, reopen Hormuz to commercial shipping, end a U.S. blockade of Iranian ports, and launch negotiations on Iran's nuclear program. The deal awaited President Trump's final signature. As of the weekend, Trump had not signed. His public statements have oscillated between optimism — "very close," he told reporters — and skepticism, at one point calling Iran's counterproposal "totally unacceptable." Iran, for its part, has been characteristically contradictory: its chief negotiator posted on social media that his country's concessions had been "obtained through missiles, not negotiations," while other officials indicated the talks were continuing constructively.
What is clear is that even a signed MOU would not immediately reopen the strait to normal commercial traffic. The shipping industry's institutional memory is long, and the trauma of the past 94 days is deep. "Our general sense is that the threat to ships crossing the Strait is still significant," an oil industry source told CNN on Monday. "We will not see a full resumption of traffic through the strait until there is a stronger guarantee of safe passage." Insurers, who effectively control whether ships can operate, are not going to re-enter the region on the basis of a political announcement alone. They will wait for evidence — weeks of incident-free transits, a standing naval escort framework, or some other verifiable guarantee. That process will take time even in the best-case scenario.
Senior advisor Bob Parker at the International Capital Markets Association put the oil market arithmetic plainly: even with a ceasefire, prices "will likely remain between $90 and $100 at least for the next couple of months" due to damaged infrastructure, depleted inventories, and security concerns that will persist regardless of what diplomats sign. He noted "significant" damage to refineries and pipelines across the Gulf as a direct result of the war — physical infrastructure that cannot be replaced by a memorandum of understanding.
What the Numbers Look Like From Here
Brent closed May at roughly $92 to $93 per barrel — down significantly from the April peak of $138, and representing what the market is now pricing as a cautious ceasefire premium rather than an active supply shock premium. That is a meaningful distinction. In April, traders were pricing the risk that Iranian oil might never return to market in meaningful volumes. Now they are pricing the risk that it returns more slowly than hoped.
The U.S. Energy Information Administration's June Short-Term Energy Outlook, published this week, projects Brent averaging around $106 per barrel in May and June, with prices expected to fall toward $89 per barrel in Q4 as Middle East production gradually recovers, and $79 per barrel through 2027. That forecast rests on the assumption that the ceasefire holds and the strait eventually reopens. If either assumption fails, the range shifts dramatically upward.
The EIA's data also contained a notable structural footnote: the UAE has formally departed from OPEC effective May 1, 2026, taking with it a significant portion of the cartel's spare production capacity. OPEC's spare capacity is now projected at 2.5 million barrels per day through 2027, compared with a prior forecast of 3.8 million. In a world where any number of things could go wrong in the Gulf, the margin for error has narrowed.
Meanwhile, U.S. crude inventories have declined for six consecutive weeks, approaching minimum operating levels — a sign that the supply shortage is not merely a pricing phenomenon but a physical one. The question of where inventories go from here depends almost entirely on how quickly Hormuz traffic can be restored.
The Longer Shadow: What Doesn't Come Back Even When the Shooting Stops
There is a version of this story where the MOU is signed, Hormuz reopens, tankers return, oil flows, and by Q1 2027 the market has largely normalized. The EIA baseline is roughly this scenario. It is plausible.
But it is worth sitting with what does not come back easily, even in the optimistic version.
The shipping industry has demonstrated, through the Red Sea crisis that began in late 2023, that behavioral adaptation can become structural. Container shipping companies that rerouted to the Cape of Good Hope during the Houthi period did not snap back to the Red Sea when the political situation improved. They had already redesigned their networks, renegotiated contracts, and built the Cape route into their long-term scheduling frameworks. The Suez Canal Authority's traffic has remained persistently below pre-crisis levels even after the immediate security threat diminished. The same dynamic is now playing out at a much larger scale for Hormuz.
Iran's energy infrastructure — refineries, pipelines, storage facilities — has sustained real physical damage from the conflict. OPEC+ acknowledged after its March meeting that "war-related damage to energy infrastructure could have lasting effects on oil supply even after hostilities ease." Saudi Arabia's Ras Tanura refinery was struck by a drone attack; its full operational status has not been confirmed. Qatar's Ras Laffan LNG facility, which supplies a significant portion of Europe's liquefied natural gas, has been operating under elevated security protocols. The physical recovery of Gulf energy infrastructure will take longer than the diplomatic recovery.
And then there is the question of China, which is the largest single buyer of oil moving through Hormuz, taking approximately 5.35 million barrels per day through the strait in normal times. China has been watching the closure carefully and drawing its own conclusions about supply chain vulnerability. The strategic decision-making in Beijing about energy diversification — toward Russian pipelines, domestic production acceleration, accelerated EV adoption — will be influenced by this crisis in ways that will compound over years, not months.
The EIA projects U.S. crude production averaging 13.6 million barrels per day in 2026, a record. That is not a coincidence. Washington has an interest in ensuring American production is robust enough to offset Gulf supply shocks, and the current crisis has underlined that interest with considerable force. The energy geopolitics of the next decade will be shaped, in ways that are still becoming clear, by what happened in those 48 hours on February 28.
The Bottom Line: A Market Living on Hope
As of this morning, markets are cautiously optimistic. The word "cautiously" is doing a lot of work in that sentence.
Brent is trading around $97 per barrel, up slightly on the week. The Iran-U.S. MOU still lacks Trump's signature. Hormuz traffic remains at a tiny fraction of its normal volume — a few ships per day where a hundred used to sail. Vessel strikes in the Persian Gulf have not stopped. Shipping insurers have not re-entered the market. The Cape of Good Hope route is fully embedded in global logistics planning, adding cost and time to every voyage. Saudi Arabia's pipeline is running at maximum capacity but cannot replace the full volume of Gulf exports. And global oil inventories are declining at a rate of 8.5 million barrels per day.
The cautious optimism is real — the prospect of a 60-day ceasefire extension and nuclear talks is genuinely the most significant diplomatic progress since the war began. Oil prices have come down 20% from their peak on that prospect alone. But this is a market pricing a hope, not a fact. The moment that hope is tested — by a failed negotiation, a fresh incident in the strait, a decision in Tehran that sanctions relief is not worth the concessions being demanded — the math changes immediately.
The Strait of Hormuz has handled every previous crisis thrown at it for decades. Tankers kept moving through the Iran-Iraq war, through the Gulf War, through multiple rounds of sanctions and saber-rattling. The channel's resilience was treated as something close to a natural law of global commerce.
That natural law has been suspended for 94 days. Nobody yet knows for how long, or what the world looks like on the other side.