Strait of Hormuz closure disrupts 20% of global oil — and WTI is feeling it

Oil flows through the Strait of Hormuz have been restricted to a trickle since February 28, when the US and Israel launched an air war against Iran. The International Energy Agency has characterized the resulting supply disruption as "the largest in the history of the global oil market." (FACT: IEA Oil Market Report, May 13, 2026) Approximately 14 million barrels per day — roughly 14% of global supply — has been removed from the market, including exports from Saudi Arabia, Iraq, the UAE, and Kuwait. (FACT: Reuters, May 22, 2026)

WTI crude traded at $96.53/bbl on May 22, while Brent held at $105.88, both over 60% higher than pre-war levels around $60/bbl. (FACT: Reuters, May 22, 2026) But the price headline masks the severity of the physical deficit. The EIA assesses that Iraq, Saudi Arabia, Kuwait, the UAE, Qatar, and Bahrain collectively shut in 10.5 million bpd of production. (FACT: EIA STEO, May 12, 2026) Global oil inventories are depleting at a record rate of approximately 8.5 million bpd during Q2 2026. (FACT: IEA, May 2026) Jeff Currie, executive co-chairman at Abaxx Commodity Exchange, warned on May 18 that physical shortages could hit Europe "any day now" and that prices will go "non-linear" once inventories exhaust. (FACT: CNBC, May 18, 2026)

The key variable is the timeline to normalization — and it is longer than headlines suggest. Societe Generale analysts calculate that even if the Strait were to reopen in early June, the physical supply chain sequence of tanker transit, discharge, refining, and distribution means a delay of at least 52 days before meaningful relief reaches consumers. (FACT: CNBC, May 18, 2026) ADNOC's CEO stated that full oil flows through the Strait will not return before the first or second quarter of 2027, even if the conflict ends now. (FACT: Reuters, May 22, 2026) A late June reopening would push physical relief into late August, with full normalization not expected until September.

The IEA coordinated the largest-ever strategic reserve release in March — 400 million barrels across 32 member nations, of which 164 million has already been deployed. (FACT: IEA via Reuters, May 13, 2026) The US SPR stands at 392.7 million barrels, down from 397.9 million the prior week. (FACT: EIA, May 2026) The IEA now forecasts global supply will fall 3.9 million bpd across 2026, flipping its December projection of a nearly 4 million bpd surplus to a 1.78 million bpd deficit. (FACT: Reuters/IEA, May 13, 2026)

Peace talks between Washington and Tehran remain fragile. President Trump claimed on May 20 that negotiations were in their "final stages," causing WTI to fall below $100 briefly, but investors doubt a breakthrough — oil rose again on May 22. (FACT: IBTimes, May 20; Reuters, May 22, 2026) CEPR modeling projects WTI peaking at $94/bbl under a one-quarter closure scenario and remaining above $80 through end-2026. (FACT: CEPR, May 14, 2026)

The number that matters for your business: A US logistics company consuming 50,000 gallons of diesel per month at pre-war prices of roughly $3.00/gallon is now paying approximately $4.20/gallon — an additional $60,000 per month in fuel costs. At the current elevated price environment, annualized fuel cost increases exceed $700,000 for a mid-size fleet operator. For manufacturers relying on oil-based feedstocks or energy-intensive processes, the war premium in crude translates directly into margin compression on a scale not seen since the 1970s.