The ongoing conflict in the Middle East and the de facto closure of the Strait of Hormuz for more than two months have led to a situation that the rating agency "Crisil" defines as "the largest energy shock in history". The disruptions span global energy, food, and maritime trade markets, and the prospects for a political settlement remain unclear.
Surge in oil prices and loss of 10% of global production
At the end of April, the price of "Brent" crude briefly exceeded $120 per barrel – a level not seen since June 2022. This occurred after President Donald Trump rejected Iran's proposal to open the strait before the start of nuclear negotiations, insisting that the naval blockade continue until an agreement is reached with Tehran.
According to data from "S&P Global", cited in a "Crisil" report from May 11, disruptions in the supply of crude oil and petroleum products have led to the removal of at least 10% of global production volume from the market. This further tightens the already strained balance between supply and demand.
A blow far beyond the energy sector
The International Energy Agency (IEA) has described the situation as "the largest supply disruption in the entire history of the global oil market". IEA head Fatih Birol warned that this is "the most serious threat to energy security" the world has ever faced.
Before the start of the US-Israeli military operation against Iran on February 28, about 20 million barrels of oil passed through the Strait of Hormuz every day. Since then, the daily number of passing ships has decreased by over 90%, according to "Goldman Sachs" data.
However, the consequences are felt much more widely than just in the oil market. Thai rice exports to Iraq – which previously amounted to nearly 1 million tons annually – have "completely stopped" since the beginning of the war, as ships cannot pass through the strait. This was reported by the honorary president of the Thai Rice Exporters Association, Chookiat Ophaswongse.
In three months, Thailand has lost over 200,000 tons of rice exports to the Middle East, and transport and insurance costs have risen by about 20%. War risk premiums for ships passing through the Persian Gulf have jumped from a pre-crisis level of about 0.1% of the vessel's value to 2–3% – an increase of up to 2400%, states a March report by reinsurance broker "Howden Re".
Countries rethink vulnerabilities in maritime security
South Korea, which has 26 national-flagged ships stranded in the strait region, is in negotiations with the United States and partner countries "on several fronts" regarding its contribution to ensuring freedom of navigation. This was reported by a high-ranking official from the presidential administration in Seoul.
According to information from the "Korea Herald", South Korean authorities have already attempted to extract their ships during a short two-week truce in April. Seoul recently condemned yet another attack on a commercial cargo ship in the Strait of Hormuz, warning that such incidents put key global energy transport systems at risk.
Macroeconomic effect: slowed growth and higher inflation
According to "Crisil's" forecast, the energy shock will slow India's real economic growth to 6.6% in the 2027 fiscal year, compared to 7.6% a year earlier. At the same time, consumer inflation is expected to accelerate to an average of 5.1%, up from about 2% before the crisis.
The European Commission also warns of the long-term nature of the crisis. In a statement from April, Brussels emphasized: "We should not be under any illusion that the current energy price crisis will be short-lived".
Combined with increased transport and insurance costs, higher oil and gas prices threaten industry competitiveness, reduce household purchasing power, and create a risk of a new wave of inflationary pressure in many economies around the world.