The shutdown of the Strait of Hormuz has created one of the largest oil supply disruptions in modern history, affecting 20% of the global oil supply. Around 20 million of the world’s 100 million barrels of oil move through the strait each day. Brent crude oil prices exceeded $120 per barrel in April 2026, rising from $65–$70 in February 2026.
The USA
The USA witnessed 3.8% inflation (measured by CPI) in April 2026, mainly driven by the energy shock caused by the conflict in the Middle East. The rate is above the Federal Reserve’s 2% target. According to the U.S. Department of Labor, the CPI for all items rose 0.6% in April. Even though the USA has energy independence and is a net energy exporter, higher gas prices hurt consumers. Americans have spent about $45 billion more on gasoline and diesel during the Iran war than they did during the same period a year earlier, based on fuel price and demand data, according to The Wall Street Journal.
Asian Countries
Most Asian countries, whose 80% oil imports largely pass through the Strait of Hormuz, were hit the hardest. Most countries in Asia, except China, Japan, and South Korea, typically maintained low oil stockpiles because they are geographically closer to the Gulf. What was once a blessing turned into a curse. Asia and the Pacific region were the first areas to experience major shortages and disruptions in the supply of fuel and energy. Factories reduced production because of fuel shortages and higher energy costs. At the same time, many people rushed to buy fuel, creating long lines at gas stations. To prevent shortages, gas stations imposed limits on how much fuel each customer could purchase.
Europe
Europe entered the crisis with a strong safety cushion, holding about 450 million barrels of oil and fuel reserves, according to Société Générale, a French multinational banking and financial services company. Although Europe imports relatively small amounts of LNG and crude oil from the Gulf, it depends on the region for petroleum products such as jet fuel.
Market Resilience
Bank of America says the global economy has been more resilient than expected. Several factors have helped offset about half of the supply shortages caused by the disruption. According to Bank of America, the global economy has been able to handle the oil disruption better than expected because of five main factors:
1. Prewar “Super Glut” (Oil Oversupply)
Before the conflict began, global oil production was very high. The world was already producing about 3 million more barrels of oil per day than needed, creating a surplus that helped cushion the shock.
2. Rerouting of Oil Shipments
Although the Strait of Hormuz is a critical route for global oil trade, exporters have found alternative pipelines and ports, replacing about 5 million barrels per day that would normally pass through the strait.
3. Release of Strategic Oil Reserves
Thirty-two member countries of the Organization for Economic Co-operation and Development (OECD) agreed to release 400 million barrels from their emergency oil reserves. This additional supply helped stabilize markets and reduce price spikes.
4. Lower Oil Consumption
As fuel prices increased, people and businesses used less oil. Global oil demand fell by about 2.3 million barrels per day compared with the previous year. Governments, particularly in Asia, encouraged remote work, reduced business travel, and greater use of public transportation.
5. U.S. Energy Resilience
The United States is now a net oil exporter, meaning it exports more oil than it imports. Since the war began, U.S. oil exports have increased to more than 6 million barrels per day, helping replace some of the lost supply.
These five factors have increased supply or reduced demand, helping to offset a large portion of the oil disruption. As a result, the global economy has avoided the severe fuel shortages and economic damage that many analysts initially feared.
While emergency oil reserves, lower fuel demand, and alternative shipping routes have helped prevent a global recession, the crisis shows that the world still depends heavily on a few key energy routes. The Strait of Hormuz remains a major weak point in the global energy system, and future disruptions could create serious economic challenges.
Reference:
https://www.cnbc.com/2026/05/29/oil-price-iran-deal-war-ceasefire-trump.html
https://www.wsj.com/finance/commodities-futures/oil-crisis-asia-europe-africa-iran-war-ea883ba2
https://www.privatebank.bankofamerica.com/articles/washington-update.html