Strait of Hormuz – what’s at stake?

While geopolitical tensions have intensified in the Middle East, current oil and gas export flows through the Strait of Hormuz remain stable. However, the region’s strategic importance across energy and chemicals markets underscores the outsized impact any disruption would have.

Market and Trading Calls:

• Crude: A closure would severely impact crude flows—over one-third of global seaborne volumes pass through Hormuz—though exports remain stable amid targeted Israeli strikes on domestic Iranian infrastructure.
• Natural gas: Any Hormuz disruption would severely impact the 20% share of global LNG flows handled through this route.
• NGLs: The MEG supplies over a quarter of global NGLs to Asia, and while Iranian LPG output faces minor disruption, future constraints could redirect demand toward US supply.
• Products/chems: The MEG’s refined product and methanol exports are critical for Asia and Europe, and any disruption would impact diesel flows, petrochemical feedstocks, and Fujairah bunker fuel supply.
• Fertilizer: Exports from the MEG are relevant for India, Brazil, and China.
• MEG imports: The MEG’s reliance on agricultural imports through Hormuz—especially grains, oilseeds, and sugar—makes regional food security highly vulnerable to disruptions.

Share of global seaborne commodity flows transiting the Strait of Hormuz in 2024 (imports + exports)

Source: Kpler

While the likelihood of Iran blocking the Strait of Hormuz remains low due to political and economic considerations (see here and here), it is worth keeping the potential commodity implications in mind.

Crude

Needless to say, the oil market ramifications of a Hormuz closure would be unprecedented, with more than a third of global seaborne crude flows passing through the strait, 88% of which typically stays in the East of Suez (all percentages basis annual 2024 figures by Kpler). For now, oil flows out of the Middle Eastern Gulf (MEG) remain stable and oil prices in check as recent Israeli strikes have targeted Iranian facilities tied to domestic consumption (refineries and fuel storage) rather than the country’s oil export terminals centered on Kharg Island (see here), which accounts for 96% of Iranian exports. The minor crude/condensate imports into the region visible in the chart are comprised of occasional cargoes of Australian condensate bought by ENOC for its Jebel Ali condensate splitter.

LNG

In addition, the MEG accounts for around 20% of global LNG exports. In the event of a Hormuz closure, Asian buyers would be hit hardest (see here) given that 87% of MEG LNG outflows are usually heading east. On Saturday, an Israeli drone struck Iran’s Fajr Jam gas processing plant (see here), however, the impact on actual flows is minimal so far considering that Iran does not export any LNG. MEG export volumes are split roughly 93/7 between Qatar and the UAE.

NGLs

Apart from the US, the MEG is the world’s major exporter of NGLs (propane, butane, ethane), representing 25.7% of the global total. Respective exports are dominated by Qatar, the UAE, and Iran, while Saudi Arabia and Kuwait export significant volumes as well. Almost all these cargoes stay in Asia, with China and India being the main recipients. The impact of Saturday’s drone attack on Iranian gas processing infrastructure is minor for now, as it only affects around 2% (10 kbd) of the country’s LPG output (see here). In the event of further NGL supply disruptions, China’s petrochemical players could return to US barrels after the US’ effective ban on ethane exports to China will be lifted (see here).

Products/chemicals

The MEG is also a major player when it comes to exports of CPP (13.6% of global seaborne total) and DPP (14.5%). A cut to CPP flows would hit OECD Asia and Europe in particular, as the latter substitutes embargoed Russian diesel with Middle Eastern volumes (among others). Reduced MEG DPP exports would mostly impact refiners in Southeast Asia and in the US which partially replaced Russian residues with Middle Eastern ones since 2022. Also, the UAE’s Fujairah bunkering hub located outside the Strait of Hormuz would face severe shortages of shipping fuels (233 kbd of MEG DPP inflows in 2024). MEG chemicals exports (14%) are dominated by methanol (derived from natural gas), of which the region supplies 35% of the seaborne total, with the primary buyers being in East Asia and Northwest Europe.

Fertilizer

Perhaps lesser known is that the MEG is a major exporter of fertilizers and its feedstocks (16.3% of the global seaborne total). Major recipients include India, Brazil, and China. Also, the region provides substantial volumes of limestone to India and Bangladesh, as well as cement and clinker to Africa.

Food security at risk as Middle East relies heavily on agricultural imports

Of course, seaborne imports into the MEG are passing through the Strait of Hormuz as well. While minor in comparison to the region’s exports, major import streams primarily consist of agricultural commodities. The MEG is a major buyer of grains and oilseeds (corn, wheat, barley, soybeans), representing 4.2% of the global seaborne total, around half of which is sourced from Brazil and Argentina. The former is also the main supplier of the MEG’s significant sugar imports. Therefore, aside from the severe energy implications for the rest of the world, a closure of the strait would pose a massive risk to Middle Eastern food security.

‍

Want market insights you can actually trust?

Our analysts are updating Insight in near real-time, delivering critical intelligence on trade flows, pricing shifts, and geopolitical risk.

Updates are live across oil, LNG, and cross-commodity sectors.

Request access here.