Every 10 days the Strait of Hormuz is closed, a 200-million-barrel physical gap is created in the global oil flow. This is not a temporary kink but a massive hole in the supply chain that will take months to resolve and normalize, even long after transit resumes.

The 20 million barrels of oil flowing daily through the Strait of Hormuz represent 20% of global supply. A blockade constitutes a disruption four times larger than the Iranian Revolution or Yom Kippur War embargoes, with no simple replacement.

The war in Iran is choking the Strait of Hormuz, which handles 20% of global oil. This disruption impacts nearly three times more oil volume than Russia's exports at the start of the Ukraine war, posing a significantly larger threat to the global economy and inflation.

Even a brief closure of the Strait of Hormuz has immediate, lasting effects. Shutting in millions of barrels of oil and LNG damages production facilities, which can take over 60 days to bring back online, ensuring a recession even if the conflict ends quickly.

The Middle East conflict has moved beyond risk to a physical blockade of the Strait of Hormuz. With commercial tankers no longer transiting, nearly 20% of global oil is cut off from markets. This supply disruption, not just a risk premium, is driving oil prices toward $100/barrel.

The market impact from the expected, but unrealized, loss of 3 million barrels/day from Russia was immense. The current Strait of Hormuz disruption is four to five times larger at 14 million barrels/day. This scale of shortage is historically unprecedented, meaning past events are poor guides for predicting market outcomes.

Major historical oil price movements were triggered by supply-demand imbalances of just 2-3 million barrels per day. A disruption at the Strait of Hormuz would impact 20 million barrels daily, a scale that dwarfs previous crises and renders standard analytical models inadequate.

If the Strait of Hormuz remains closed, OECD commercial crude inventories are projected to reach their operational floor by early May. At this point, the system loses functionality, and physical stock buffers cease to be the balancing mechanism. Instead, demand will be forcibly rationed through dramatic price increases.

The full impact of the Hormuz closure hasn't hit yet. An "air pocket" in global tanker supply is developing. When tankers that departed pre-conflict finally arrive at their destinations, Asian inventories will begin drawing down at an unprecedented 10-15 million barrels per day, triggering a severe, delayed price shock.