Six weeks after the United States and Israel began bombing Iran, the shutdown of the Strait of Hormuz has turned into a tangible supply shock. The waterway moves roughly 20 % of daily global oil—about 20 million barrels—so its closure threatens a disruption comparable to the early‑2020 Covid lockdown. Early estimates put the shortfall at 10‑15 million barrels per day to global markets.

Mitigation pathways soften the impact. Saudi Arabia can reroute an extra 3‑5 million barrels via its Abqaiq‑Yanbu pipeline, the UAE adds 0.7 million, and Iran permits limited transits while boosting output from the Jask terminal. In addition, IEA members agreed to release 400 million barrels from strategic reserves, and global oil stocks sit at a 2022‑high of 8.21 billion barrels for the near term.

Even with those buffers, the net shock still equals about half the Covid‑era supply squeeze, pushing spot crude up 60 % and European diesel toward $150 per barrel. Refinery margins have more than doubled, forcing higher consumer prices despite modest moves in food costs. Central banks now face an inflation‑tilted stagflation risk, with Europe’s two‑year inflation expectations climbing over one percentage point for policymakers.