The arithmetic of a narrow strait
Published 4 October 2026
A strait is a very simple machine. Oil goes in one end of the Persian Gulf and comes out the other, and almost everything that matters about the price of petrol in Delhi, Tokyo or Rotterdam follows from how many tankers can make that trip in a week. The numbers are worth setting down before the war starts, because the war is partly an argument about which of them were real.
The U.S. Energy Information Administration puts the strait between Oman and Iran, deep and wide enough for the largest crude tankers, with very few alternatives if it closes. In 2024, oil flow through the strait averaged 20 million barrels per day, about 20 percent of global petroleum liquids consumption. The EIA added that flows in 2024 and the first quarter of 2025 made up more than a quarter of global seaborne oil trade, and that around one-fifth of global liquefied natural gas trade also went through, primarily from Qatar. Between 2022 and 2024, crude and condensate volumes through the strait fell by 1.6 million barrels per day, partly offset by a 0.5 million barrel increase in product cargoes. The EIA attributed part of that to the OPEC+ production cuts from November 2022.
Where the oil goes
The destination matters more than the volume. In an earlier EIA note, the agency estimated that 82 percent of the crude and condensate that moved through the strait in 2022 went to Asian markets. China, India, Japan and South Korea together took 67 percent of Hormuz crude and condensate flows in 2022 and the first half of 2023, according to the EIA's analysis of Vortexa tanker-tracking data. The United States, by contrast, imported about 0.7 million barrels per day of crude and condensate from Persian Gulf countries through the strait in 2022, which was about 11 percent of American crude and condensate imports and 3 percent of American petroleum liquids consumption. Those are 2022 figures, and the EIA noted that American imports from the Gulf had halved since 2018 as domestic production rose.
That asymmetry is why this file spends so many chapters on India. A war in the Gulf is, in oil terms, mostly an Asian problem that Americans experience as a price.
The pipeline map
Before the war the standard reassurance was that Gulf producers could route around the chokepoint. The EIA's 2023 note was specific about how much. Only Saudi Arabia and the United Arab Emirates have operating pipelines that bypass the strait. Saudi Aramco's East-West crude pipeline had a stated capacity of 5 million barrels per day, temporarily expanded to 7 million in 2019, and the UAE links its onshore fields to the Fujairah terminal on the Gulf of Oman with a 1.5 million barrel pipeline. Iran inaugurated the Goreh-Jask pipeline and the Jask terminal in July 2021 with a single export cargo and a capacity of 0.3 million barrels, and had not used it since. Adding the available spare capacity, the EIA estimated that around 3.5 million barrels per day of effective unused bypass capacity could be available in a disruption.
Set that next to 20 million barrels per day and you have the whole problem in one subtraction. The bypass could cover, at the EIA's estimate, under a fifth of the flow. Everything else, from Kuwait, Iraq, Qatar's LNG and the rest of the Gulf's producers, has to go through the strait or stay where it is.
By 2026 the numbers had moved. In May the Guardian reported that the UAE's existing Habshan-Fujairah pipeline can carry up to 1.8 million barrels a day, and that the crown prince had told the state oil company to fast-track a second line to be carrying oil by 2027. The exact capacity of the new line has not been disclosed; the paper noted that doubling the existing pipeline would mean 3.6 million barrels a day, and that Saudi Arabia, by comparison, can move roughly 7 million barrels a day from its eastern fields to Yanbu, of which about 5 million are exported. The same report said the UAE had left OPEC weeks earlier, after 60 years, a sign of a schism with Saudi Arabia. A pipeline that lets one producer ignore a blockade is also a pipeline that lets it ignore a quota.
The bypass is also not invulnerable. On 14 September Al Jazeera, drawing on Reuters, reported that drones had struck the 1,200-kilometre East-West pipeline the previous Thursday, 10 September, and that Saudi Arabia had suspended operations as a "precautionary" measure. The line normally carries 4 to 5 million barrels per day, up to 5 percent of global oil supply was affected, and sources told Reuters repairs could take five to six weeks, though another source said operations could restart sooner. Saudi authorities traced the drone launches to Maysan province in southeastern Iraq. The report also recalled that a March strike near the Yanbu refinery had temporarily disrupted loadings. The dates for the outage differ slightly between reports, and chapter 12 sets out the window and the restart.
What it costs to try
A tanker does not simply refuse to sail. It gets a quote. Reuters reported on 6 March that war-risk premiums were up by more than 1,000 percent in some cases, and that Jefferies' example of a 3 percent rate on a $200 million to $300 million tanker implied a hull premium of about $7.5 million, against about 0.25 percent, or $625,000, beforehand. By 17 July the National, quoting a Marsh executive, put the range at 3 to 10 percent of hull value, so that a $100 million tanker faces a war-risk premium of $3 million to $10 million, against roughly $250,000 before the war. Marsh's Marcus Baker described rates as "a roller coaster mirroring the development of the price of oil," falling after the 17 June memorandum and rising again in July when Iran resumed attacks on tankers. The same report noted about 6,000 seafarers trapped in the region.
The strait's closure was therefore never a single switch. It was a stack of decisions by underwriters, charterers, crews and navies, each with its own threshold, and each repriced every time something blew up.
The September ledger
The International Energy Agency's report of 11 September shows the cumulative result. It said global oil production fell by 1.6 million barrels per day in August to 100.1 million, with more than 10 million barrels per day of Gulf output still shut in. It forecast total supply falling 5.7 million barrels per day this year, to 100.7 million, with the Gulf recovery deferred to 2027, and world oil demand declining by 2.5 million barrels per day in 2026, 940,000 steeper than the previous month's report. Demand losses, the agency said, were concentrated in middle distillates and petrochemical feedstocks, especially in Asia. Refinery throughput reached a summer peak of 81.4 million barrels per day in August, still 4.2 million lower than a year earlier, and Atlantic Basin refining margins hit record levels, led by diesel.
Put the EIA's pre-war arithmetic next to the IEA's September one. About 20 million barrels per day was exposed. More than 10 million were shut in. The bypass could carry perhaps 3.5 million, then fewer on the days a drone arrived. The rest of the gap was met by demand, which is the economist's polite word for people and factories using less. That is why the headline price tells you so little. The price was the thing doing the work that the pipes could not.
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