Iran war and the strait of Hormuz: Oil market implications six weeks in The Strait of Hormuz crisis is reshaping global oil markets in International Shipping News 09/04/2026 Six weeks into the Iran–US conflict, the closure of the Strait of Hormuz has triggered the most significant supply disruption in the modern oil market. Approximately 11 million barrels per day of crude production has been taken offline, export volumes from the Middle East Gulf have fallen from 15 million to an effective 7 million barrels per day, and refinery run cuts are adding a further 3 million barrels per day to the supply shortfall. The global market is now drawing at roughly 6 million barrels per day – and the gap is not yet fully reflected in deferred prices. For commodity traders, shipping professionals, and energy decision-makers, the critical questions are no longer whether this disruption is serious – it plainly is – but how long it lasts, how far prices must rise to rebalance demand, and which trade routes and supply sources emerge as relative winners. Market context: how we got here Prior to the conflict, the Strait of Hormuz handled an estimated 15 million barrels per day of crude and product exports from the Middle East Gulf. Saudi Arabia, the UAE, Kuwait, Iraq, and Iran collectively accounted for the bulk of those flows, with China and India as the dominant destinations. Since the strait’s effective closure, rerouting options have been limited. Saudi Arabia has activated the east–west pipeline to Yanbu at maximum capacity – around 4–4.5 million barrels per day of export capacity – while the UAE continues to export approximately 1.5 million barrels per day out of Fujairah. Iranian crude, notably, continues to transit the strait at roughly 1.5 million barrels per day. That leaves approximately 8 million barrels per day stranded. Iraq has been among the worst-affected producers. Pre-war exports of around 4 million barrels per day have collapsed to approximately 900,000 barrels per day, with only a single pipeline to Turkey – capacity 300,000 barrels per day – providing an alternative outlet. Key insights and analysis Geopolitical outlook: escalation risk remains elevated The dominant base case – assigned a probability of roughly 50–60% – is continued pressure without a decisive breakthrough, characterised by sustained airstrikes and no meaningful diplomatic resolution. A full escalation scenario, including strikes on energy and power infrastructure or boots on the ground, is assigned a 20–35% probability. A diplomatic outcome – while not impossible – is seen as a low-probability event at around 15%. The US administration’s stated preference appears to be de-escalation and an exit from the conflict. However, the disconnect between that intent and the public posture being adopted makes a clean off-ramp difficult to construct. A limited ceasefire framework, potentially involving some form of Iranian oversight over Strait transit in exchange for a halt to bombardment, has been floated – but faces strong resistance from Gulf states, for whom any Iranian control over Hormuz is constitutionally unacceptable under international maritime law. The Houthis in Yemen represent a secondary but real escalation risk. Should any GCC state formally enter the conflict, disruption to Red Sea flows via the Bab al-Mandeb – currently Saudi Arabia’s primary export route via Yanbu – would become a material threat. Refinery run reductions – affecting facilities in Saudi Arabia,