The disruption in the Strait of Hormuz isn't a formal closure. Instead, shippers and producers are adopting a "wait and see" approach, halting flows due to reports of damaged ships and skyrocketing insurance premiums, effectively creating a self-imposed blockade.

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.

Despite the effective closure of the Strait of Hormuz, oil and LNG flows show a dramatic divergence. Oil tanker volume has nearly doubled since March, reaching 25% of pre-war levels. In contrast, LNG vessel crossings are almost non-existent, running at a negligible 5% of their previous volume, indicating a different risk calculus or logistical reality.

Data reveals a divergence between LNG loaded onto vessels in Qatar and the few ships actually exiting the Strait of Hormuz. This signals a major transit bottleneck, not a supply recovery. Continued restrictions heighten the risk of production shutdowns that could extend into the critical winter demand season, threatening global supply.

While Qatari crude oil exports are recovering post-conflict, LNG flows remain minimal. This disparity is driven by physical and logistical constraints. LNG requires specialized, high-value vessels that are harder to insure and ill-suited for the ship-to-ship transfers that have become common for crude oil.

The massive outflow of oil from Hormuz is primarily from drawing down barrels stranded for months. This creates a temporary glut, but fresh loadings and actual production are lagging significantly, signaling future supply constraints may be underestimated by the market.

The pace of empty tankers returning to the Persian Gulf has been surprisingly rapid, exceeding expectations. This indicates that the primary bottleneck for restoring pre-war oil supply levels is the ability to restart production, not a shortage of available shipping capacity.

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.

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.