Six Months Into the Hormuz Crisis, the Energy Shock Is Spreading Beyond Oil

The six-month consequence of the Iran war is no longer just a higher oil-price risk premium. It is a physical supply shock. The Strait of Hormuz remains severely restricted, refined-fuel and LNG markets are tight, and the costs are falling unevenly: some U.S. oil companies have benefited from higher prices and refining margins, while import-dependent economies such as Bangladesh are paying more for energy, fertilizer and transport.

Hormuz has become a persistent supply bottleneck

Before the war, roughly one-fifth of global oil and LNG shipments passed through the Strait of Hormuz. The route handled about 18 million barrels per day of crude and refined products before the conflict, but flows fell to 4.8 million b/d in July and averaged about 2 million b/d in August, according to ship-flow estimates cited by Reuters.

The decline is not explained only by physical damage. Attacks, mine risks, naval restrictions, unwilling crews and unavailable or prohibitively expensive insurance have made transit commercially difficult even when vessels are technically able to move. 3 On August 25, only five commodity vessels were recorded transiting the strait, well below pre-war levels.

That distinction matters. A waterway can be partially open in a legal or military sense while remaining effectively closed for ordinary commercial shipping. The result is less reliable access to crude, LNG and refined products—and greater volatility in freight, insurance and delivery costs.

The oil shock is now a broader fuel-market shock

Brent crude rose sharply after the strikes and later moved above $100 per barrel at the height of the crisis, compared with roughly $71 per barrel immediately before the war. 24 But the price of crude captures only part of the disruption.

Refined fuels have become especially vulnerable. Reuters reported that global refinery throughput in July was nearly 5 million b/d below the previous year’s level, while diesel and other refined-product markets were described as exceptionally tight. ExxonMobil and Chevron warned that fuel supplies could remain constrained in the second half of the year, even as their refining operations benefited from elevated margins. 18

The International Energy Agency projected that global oil supply would fall by 4.3 million b/d, or about 4%, in 2026 as the Hormuz shutdown, attacks elsewhere and other disruptions reduced available supply. The IEA also cut its 2026 oil-demand forecast, indicating that high prices and economic damage are beginning to suppress consumption.

This creates a difficult market balance: weaker demand may eventually moderate crude prices, but diesel, LNG and other products can remain expensive because refining, liquefaction, shipping and storage capacity cannot be replaced immediately.

The Iran–Oman route offers relief, not normalization

Iran and Oman have discussed a temporary joint shipping corridor through Hormuz, alongside coordination on mine-clearing efforts. Oil prices dipped when progress in the talks was reported, reflecting the possibility of safer and more predictable transit.

However, the proposal is an interim traffic-management arrangement—not proof that the strait has reopened to normal commercial volumes. A durable recovery would require more than an agreed route. Shipowners, insurers and crews would also need confidence that vessels can pass consistently and safely, without renewed attacks, mines or changing restrictions.

That is why the market has treated each diplomatic development as a source of temporary relief rather than a definitive end to the crisis. Negotiations have repeatedly affected prices, but shipping remains vulnerable to military escalation and political breakdown. 10

U.S. oil companies are benefiting unevenly

Higher crude prices and strong refining margins have created a significant windfall for parts of the U.S. energy industry. ExxonMobil reported second-quarter earnings of about $14.5 billion, while Chevron reported roughly $12.1 billion; both companies benefited from stronger prices and refining conditions. 1718

Their results also show why “higher prices help oil companies” is an incomplete summary. Exxon’s first-quarter net income fell to a five-year low as supply disruptions affected operations, despite the company beating adjusted earnings expectations. 20 Exxon later reported record second-quarter diesel output, while Chevron’s U.S. refineries processed more than 1 million barrels per day. 18

The largest beneficiaries are companies with diversified production, substantial U.S. output and refining capacity that can capture higher margins while relying less directly on Gulf shipping. The available evidence does not support a precise company-by-company comparison of Gulf supply losses or earnings effects for ConocoPhillips and Occidental Petroleum, so those impacts should not be overstated.

The broader contrast is clearer: diversified producers and refiners may gain financially from scarcity, while companies and consumers that need delivered fuel face higher costs and greater supply risk.

Bangladesh shows how the shock reaches households

Bangladesh is one of the clearest examples of the crisis moving from maritime security into domestic economic hardship. QatarEnergy halved its scheduled 2026 LNG deliveries to Bangladesh, forcing state-owned Petrobangla to seek alternative suppliers and more expensive spot cargoes.

The World Bank reported that five of Petrobangla’s six LNG contracts had been declared force majeure and that spot LNG prices had risen to $24–$28 per million British thermal units—more than twice earlier levels. It projected that energy subsidies could rise to 2.8% of GDP, leaving less fiscal room for social spending.

The shortage has also affected industry and agriculture. Gas constraints have reduced power and industrial supply, while fertilizer markets have tightened as Middle Eastern energy disruptions affect nitrogen-fertilizer production. 4 Reports linked the gas shortage to the shutdown of the Ashuganj urea plant, although the timing and causes described across available reports are not fully consistent.

The social effects are potentially large. A World Bank-linked assessment reported that nearly 600,000 jobs could be at risk and that the number of people expected to escape poverty in 2026 could fall from roughly 1.7 million to about 500,000. These are projections, not final outcomes, and depend on how long the conflict and energy-price shock persist.

Bangladesh’s experience illustrates the transmission mechanism: disrupted LNG deliveries lead to emergency spot purchases; expensive gas raises power and industrial costs; fertilizer shortages raise agricultural costs; and higher import bills put pressure on subsidies, household incomes and poverty reduction.

Pipelines may improve resilience, but not quickly

Gulf producers are pursuing or discussing pipelines that could move some crude around Hormuz. At least seven major projects were reported to be under construction, in planning or under discussion in July.

Those investments may reduce future dependence on a single maritime chokepoint, but they cannot rapidly replace the strait’s full seaborne capacity. Energy analysts cited by NPR said that building enough bypass infrastructure soon is unlikely, meaning consumers could continue to face elevated prices even if alternative routes expand.

Nor would pipelines solve every problem. They primarily address crude transport. LNG exports, refined products, shipping insurance, refinery availability and mine-clearance risks would still require separate solutions.

The decisive variable is political

Six months into the crisis, the energy market is being shaped less by a permanent geological shortage than by the security of transport and the durability of diplomacy. A credible agreement that protects commercial shipping could release stranded supply and reduce risk premiums. Renewed attacks or a broader regional escalation could push flows lower again.

Even after a formal reopening, the effects would not disappear immediately. Tankers would need to move, insurance would need to return, storage and refinery systems would need to rebalance, and LNG buyers such as Bangladesh would still face the consequences of interrupted contracts.

The most defensible conclusion is therefore narrower than a forecast of permanently high oil prices: Hormuz has exposed how quickly a maritime chokepoint can become a global fuel, fertilizer and fiscal crisis. A temporary Iran–Oman route may slow the damage, but only sustained safe passage—and time for supply chains to normalize—can reverse it.