The closure of the Strait of Hormuz has caused the biggest oil supply disruption in history
The closure of the Strait of Hormuz caused the largest oil supply disruption in history/Photo: shutterstock.com/Sven Hansche
The ongoing conflict between the U.S. and Iran and the virtual blockage of the Strait of Hormuz has caused the biggest disruption to global oil supplies in history, consulting firm Rapidan Energy said, it was quoted by CNBC as saying.
Details
The war in the Middle East has affected about 20% of the world's oil supply - more than double the previous record set during the 1956 Suez crisis, Rapidan says. Then, 70 years ago, armed forces from France, Britain and Israel invaded the Sinai Peninsula after Egypt nationalized the Suez Canal.
The current supply disruption is also nearly triple the impact of the 1973 oil crisis, when disruptions affected about 7 percent of global supply, Rapidan calculated.
The current crisis differs from previous ones in the absence of spare capacity that could quickly compensate for missing supplies, Rapidan noted. The main reserve capacities are concentrated in Saudi Arabia and the UAE, but due to the closure of the strait, these countries have been virtually cut off from the global oil market. Saudi Arabia also has the port of Yanbu on the Red Sea, where an oil pipeline with a maximum throughput capacity of 5 million barrels per day will run. But the throughput capacity of Yanbu is only about 1.5 million barrels per day, while in February daily oil exports from Saudi Arabia amounted to about 7.2 million barrels, Reuters wrote with reference to Kpler data.
As a result, the market has been left without a meaningful "safety cushion", and rebalancing can only happen through a drop in demand after a sharp rise in oil prices, Rapidan believes.
Context
Against the background of the actual blockage of the Strait of Hormuz and stopping the export of raw materials from the Persian Gulf, world oil prices at the auction on March 9 rose to $119.5 per barrel for the first time since 2022. Then quotations slowed down: at the time of publication of this text, Brent crude oil rose by 7% to $99.4 per barrel.
This article was AI-translated and verified by a human editor
