Hormuz Strait Closure Slashes Oil Flows by 75%

The Strait of Hormuz, a vital artery for global oil transportation, has experienced a dramatic decline in traffic. Data from the EIA indicates that only 4.9 million barrels per day of crude and liquids passed through the strait in the second quarter of 2026. This represents a stark contrast to the 21.6 million barrels per day recorded in the final quarter of 2025, signaling a significant disruption. The closure, which began in late February following the escalation of conflict between Iran and the U.S. and Israel, has effectively choked off a substantial portion of global oil supply. Iranian Parliament Speaker Mohammad Baqer Qalibaf indicated in June that the management of the strait "will never return to the way it was before." This statement suggests a potentially prolonged period of reduced transit, with implications for global energy security. The reduced flow through Hormuz forces a greater reliance on alternative, potentially less efficient or more costly, shipping routes. This shift could lead to increased transportation costs and longer delivery times for oil, impacting market dynamics and potentially contributing to price volatility. Traders and analysts will be closely monitoring alternative chokepoints and shipping lanes to assess the full impact of the Hormuz closure. The EIA's figures highlight the vulnerability of global oil markets to geopolitical instability in key transit regions. The sustained reduction in throughput raises questions about the adequacy of existing global oil reserves and the capacity of alternative supply routes to compensate for the loss of Hormuz transit. Market participants may need to re-evaluate supply chain risks and consider the potential for sustained upward pressure on oil prices if alternative routes cannot fully absorb the displaced volume. The situation underscores the importance of diversified energy infrastructure and the persistent geopolitical risks associated with critical energy chokepoints.