Strait of Hormuz: Oil Flows and Price Risk

Why the strait matters

The strait connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. At its narrowest it is about 33 kilometres (21 miles) wide, and the shipping lanes in each direction are only a few kilometres wide. Almost all exports from Kuwait, Qatar, Bahrain and Iraq's southern ports must pass through it, as must most exports from Saudi Arabia, the UAE and Iran. In 2024 flows through the strait made up more than a quarter of all seaborne oil trade (EIA). About one-fifth of global LNG trade, mainly from Qatar, also passes through Hormuz.

Bypass pipelines: how much oil can avoid the strait

Only Saudi Arabia and the UAE have significant pipelines that avoid Hormuz. Kuwait, Qatar and Bahrain have none.

In 2026 the bypass routes became the Gulf's lifeline. The EIA estimates the East-West pipeline was shipping more than 5 million b/d of exports through Yanbu before drone attacks in September 2026 temporarily halted it. Flows partly resumed on 22 September after repairs. Even at full use, the bypass lines can carry only a fraction of the 20 million b/d that normally passes through the strait.

The 2026 crisis: timeline

The situation in October 2026

The strait is not fully closed, but commercial traffic is a small fraction of normal. The EIA's October Short-Term Energy Outlook estimates Middle East crude shut-ins at 4.8 million b/d in September 2026, down from 5.8 million b/d in August and 10.9 million b/d at the May peak. It notes that tanker shipments through Hormuz increased slightly in September as Saudi Arabia used ship-to-ship transfers along Oman's coast. The International Maritime Organization recorded 11 attacks on tankers transiting Hormuz in the week to 4 October, the most since the war began, according to CNBC.

The EIA assumes flows stay constrained through the end of 2026, with shut-ins averaging 4.5 million b/d in the fourth quarter. It expects convoys, bypass routes, ship-to-ship transfers and new UAE bypass capacity due in 2027 to bring most regional production back to pre-conflict levels by the end of the second quarter of 2027. In the Dallas Fed Energy Survey published on 30 September 2026, 28% of oil executives expected Persian Gulf exports to normalise by the second quarter of 2027, and 21% not before 2028.

How Hormuz risk moves Brent

Hormuz affects Brent more than WTI, because Brent prices seaborne crude that competes directly with Gulf barrels in Europe and Asia. Before 2026 threats to the strait added a temporary risk premium that faded when no oil was lost. The 2026 crisis showed what happens when barrels really disappear: prices rise until enough demand is destroyed and enough inventory is released to close the gap. The Brent-WTI spread also widened, reaching $16.97 in the April monthly average of EIA spot prices, as US crude became the marginal replacement supply. See Brent vs WTI.

Three other effects matter. Tanker rates and war-risk insurance reached record levels in September 2026, according to the EIA, raising delivered costs for refiners. Dubai and other Middle East benchmarks became disconnected from actual Gulf supply. And product markets tightened even more than crude, because the Gulf is a large exporter of diesel and jet fuel. See the crack spread.