The Strait Of Hormuz Is Quietly Driving Changes in The Global Energy Pattern!

The Strait of Hormuz is quietly driving changes in the global energy pattern! Recently, the situation in the Middle East has once again become the focus of global attention. As the world's most important oil and gas transportation route, the strategic position of the Strait of Hormuz is particularly crucial - Iran directly controls the "valve" of this energy artery due to its geographical advantages, and every move of it affects the nerves of the global oil and gas market. On June 23, Iran announced a proposal to close the Strait of Hormuz. This news quickly triggered sharp fluctuations in international crude oil prices. The price of Brent crude soared on the same day, approaching $80 per barrel at one point. However, dramatically, on the 24th, the United States, Iran, and Israel successively announced a ceasefire, and international oil prices immediately plummeted. Although the conflict between Iran and Israel has temporarily come to an end, the oil and gas industry still has lingering fears. So, here comes the question: Closing the Strait of Hormuz will cut off the oil and gas arteries of which countries? And how will this move impact the global energy market pattern?
01 The Throat of Oil and Gas To figure out the first question, we need to know which countries' oil and gas production passes through this channel and which countries the oil and gas passing through this channel mainly go to. The Strait of Hormuz is located in the southwestern part of Asia, between Iran and the Omani Peninsula of the Arabian Peninsula. It is the only waterway connecting the Persian Gulf and the Gulf of Oman and is also the only way for the Arabian Sea to enter the Persian Gulf. This strait guards the throat of maritime transportation and has a of "one man guards the pass, ten thousand men can't get through", with extremely important strategic status. From the perspective of geographical space, this sea area is like a slender ribbon on the vast map of the world. This narrow waterway is about 33 kilometers at its narrowest point and undertakes the transportation of about 20 million barrels of crude oil and 10-11 billion cubic feet of liquefied natural gas per day, accounting for 30% of the global seaborne oil trade and 20% of the global LNG trade respectively. This crude oil comes from Saudi Arabia, Iraq, the UAE, Kuwait, and Iran. Approximately one-third of the 20 million barrels of crude oil comes from Saudi Arabia. The natural gas mainly comes from Qatar. Almost all of its nearly 10 billion cubic feet of liquefied natural gas per day passes through this strait. To which countries are the oil and gas passing through this strait mainly transported? Asia is the main market. More than 80% of this oil and gas goes to Asia, and China, India, Japan, and South Korea are the main destinations. Among them, India is highly dependent on Gulf crude oil, and its imports account for more than half of its total consumption. Nearly half of its liquefied natural gas also comes from Qatar. 40% of China's crude oil imports also pass through this channel. In addition, almost all of the liquefied natural gas imported by China from Qatar also has to pass through this strait. It can be said that the Strait of Hormuz connects the Middle East, the world's oil depot, on one side and Asia, an important global oil consumption market, on the other side. It is not an exaggeration at all that the US Energy Information Administration (EIA) calls it "the world's most important oil choke point". Once the Strait of Hormuz is blocked, the oil and gas artery from the Middle East to Asia will be directly cut off.
02 Fragile Energy Supply Chain The economic principle of "supply and demand determine price" is particularly evident in the Strait of Hormuz crisis. If the Strait of Hormuz is really blocked, it will lead to a sharp reduction in the global oil and gas market supply, and prices will soar. This can be clearly seen from the recent conflict between Iran and Israel. After the news that Iran was going to close the strait spread on the 23rd, the price of Brent crude oil once rose by nearly 6% to reach $79.22 per barrel. When Iran and Israel announced a ceasefire with each other, oil prices plummeted again, returning to the price range between $60 and $70. Some studies have pointed out that if the Strait of Hormuz is completely blocked, the crude oil price may rise to between $120 and $130 per barrel. However, although Iran has threatened to block the Strait of Hormuz more than once in history, it has ultimately not taken action. The reason is that blocking the Strait of Hormuz has the most direct impact on Asian countries such as China and India, while for Iran's opponents (such as Israel), their energy imports have a relatively low dependence on the Middle East, and the actual impact is relatively limited. Even so, the risk escalation in this region has still led to the rental price of large oil tankers in the Strait of Hormuz more than doubling, far exceeding the increase in the Baltic crude oil tanker index during the same period. In addition, the risk of strait closure may also lead insurance companies to significantly increase premiums or refuse to underwrite, indirectly blocking shipping activities. To put it another way, if the strait is closed, oil tankers may be forced to detour around the Cape of Good Hope in Africa, increasing the voyage by about 6,000 nautical miles. This will not only significantly increase freight rates but also lead to a tight global oil tanker fleet capacity, further driving up energy prices. As a basic energy source, the soaring price of oil will implicate the entire industrial chain of electricity, manufacturing, transportation, agriculture, etc., driving up production costs and even causing a structural break in the energy supply chain. Take China as an example. It is estimated that for every $10 increase in the oil price per barrel, China's GDP growth rate will slow down by about 0.2 percentage points, and the CPI will rise by 0.3-0.5 percentage points. In an extreme scenario (when the oil price rises to $130 per barrel), China may face an additional $1 billion in energy import costs per day, and the annual incremental expenditure will exceed $360 billion, posing a huge pressure on the balance of international payments. Therefore, the smooth flow of the Strait of Hormuz is crucial for the energy stability of oil and gas consuming countries, and energy security and stability are closely related to economic development. Its blockade will not only lead to sharp fluctuations in oil prices but also impact the industrial chain along the energy line.
03 Forcing Energy Transformation The closure of the Strait of Hormuz seemingly appears to be a sudden accidental event, but in fact, it is an inevitable outburst of the interweaving of long-term geopolitical contradictions and the fragility of the global energy system structure. This fragility is forcing energy-consuming countries to seek to establish a diversified energy pattern. On the one hand, it is reflected in finding more energy supplies. Take China as an example again. Currently, China is gradually expanding its crude oil import channels. Some of the crude oil imported by China also passes through channels such as the China-Myanmar oil and gas pipeline, the Central Asia-China-Russia pipeline, and the Malacca Strait shipping route. In addition, China is also vigorously exploring and developing oil and gas resources. In 2024, China's domestic oil and gas production exceeded 400 million tons for the first time, maintaining a rapid growth momentum of tens of millions of tons for eight consecutive years. In addition to the diversification of channels and supply chains, measures such as oil reserve peak shaving and coal supply guarantee are also safeguards to make up for the vulnerability of the international supply chain. But ultimately, fossil energy is non-renewable energy. To completely solve the vulnerability of the energy supply chain, we still need to start from the root: vigorously develop renewable energy and promote energy transformation. The energy system is gradually developing from a centralized fossil energy that highly depends on resource endowments to a more evenly distributed renewable energy. In recent years, China has continuously increased its efforts to promote the development of renewable energy, creating many conditions for the development of wind power, photovoltaic, energy storage, etc., and cultivating technical and industrial advantages. As of the beginning of 2025, China's installed wind power and photovoltaic capacities reached 530 million kilowatts and 930 million kilowatts respectively. The production and sales of new energy vehicles rank first in the world, and the production has exceeded 10 million vehicles. Currently, China has built the world's largest and most complete new energy industrial chain, contributing a quarter of the world's new green area. As of 2024, China's renewable energy power generation reached 3.46 trillion kWh, accounting for about 35% of the country's total power generation. In the first quarter of 2025, the country's renewable energy power generation achieved another significant year-on-year increase. According to the investigation and research of the Economic and Technological Research Institute of Sinopec Group, by 2045, China's non-fossil energy consumption will reach a new level, exceeding 50%, and even reaching 80% in 2060. In fact, vigorously developing renewable energy and promoting energy transformation is not only being done by China. Other Asian countries, as well as countries in Europe, Africa, and even oil and gas giants such as the UAE, Saudi Arabia, and Qatar, are also vigorously promoting energy transformation. In short, the crisis brought about by the blockade of the Strait of Hormuz is, to some extent, still a catalyst for the global energy to accelerate transformation, driving the world energy pattern to accelerate towards a greener and more sustainable direction.