Why Strait of Hormuz Disruption Is Keeping the Global Energy Crisis Alive

The disruption of oil and gas shipments through the Strait of Hormuz has become a global energy shock because it affects both the volume of fuel reaching markets and the risk and cost of moving it. The strait normally enables roughly 25% of seaborne crude-oil flows and around 20% of global liquefied natural gas (LNG) to reach energy markets. Its effective closure and attacks on regional energy infrastructure have therefore hit oil, gas and refined-fuel markets at the same time. 913

Why a regional conflict moves global prices

When a major export route is disrupted, importing countries and traders must compete for alternative barrels and LNG cargoes. That raises the value of available supply and adds uncertainty around shipping, delivery schedules and insurance. The International Energy Agency describes the disruption to flows through Hormuz as the largest supply disruption in the history of the global oil market. 13

Oil prices reflect that risk quickly. Brent crude settled at $101.21 a barrel on September 9 after attacks involving tankers escalated supply concerns. 2 Earlier in the crisis, CSIS reported that Brent rose from about $70 a barrel in February to $145 in April before easing to around $90 by late August—an illustration of how prices can fall from a peak without conditions returning to normal. 9

Why diesel can stay expensive even if Brent eases

Crude is only one part of the fuel-cost equation. Diesel depends on the availability of the right crude grades, refinery operations, inventories, freight and the market balance for middle distillates. Those constraints can make diesel rise faster than benchmark oil.

That divergence was clear in September: U.S. diesel traded above $200 a barrel, 94% above its pre-war level, while diesel refining margins in north-west Europe exceeded $100 a barrel. 8 The result is that a small decline in Brent does not automatically translate into cheaper freight, truck fuel or pump prices.

The consumer impact has been severe in some markets. The New York Times reported diesel at nearly $6 a gallon on September 9, more than 55% above its level at the start of the war. 7 In the EU, the weighted-average diesel price reached €2.26 a litre on September 17, up 38% from February 27. 8

How higher energy costs spread through the economy

Fuel and gas prices feed into transport, food distribution, industrial production and household energy bills. That makes an energy shock an inflation risk even in countries that do not import directly from the Gulf.

Governments can soften the immediate blow through fuel-tax cuts, price measures, targeted assistance or cheaper public transport. But this changes who pays rather than eliminating the underlying cost: households may pay less at the point of use, while public budgets absorb more of the shock. The IMF has advised governments to manage energy demand through measures such as subsidised public transport and working from home. 5

Higher fuel costs can also complicate monetary policy. If energy-driven inflation proves persistent, central banks may be less able to lower rates quickly; at the same time, governments facing larger support bills may encounter higher borrowing costs. Reuters noted that the renewed move above $100 oil raised fears of inflationary pressure and higher energy costs for businesses and consumers. 4

Why coal use can rise during an energy-security emergency

Gas shortages and volatile LNG prices can lead governments and utilities to use more coal-fired generation where plants and fuel supplies are available. The policy logic is short-term reliability: keeping power systems operating, reducing the need for scarce gas and limiting the risk of outages.

The IEA’s crisis policy tracker says governments have promoted fuel switching in response to the disruption, including shifts from gas-powered to coal-powered electricity in some cases, while others have sought to expand renewables and electrification. This does not necessarily mean climate goals have been abandoned. It does show that, during a supply emergency, governments may prioritise dependable power and affordability over near-term emissions reductions.

Europe’s winter vulnerability

Europe must rebuild gas inventories ahead of winter while competing for LNG in a constrained global market. The challenge is not simply the percentage in storage; it is whether enough gas can be secured without pushing prices even higher.

The European Commission has allowed countries to refill storage below the EU’s 90% target as LNG from the Gulf is increasingly diverted toward Asia, according to Euronews. Earlier analysis also warned that a prolonged interruption could leave European inventories unusually low at the end of winter and reduce end-of-October filling levels.

Low storage increases the value of every incremental LNG cargo and leaves less room for another cold spell, shipping disruption or surge in Asian demand. That is why gas-market stress can persist even when oil futures move lower.

Why diplomacy and a lower Brent price are not enough

A retreat in Brent signals that markets see a somewhat lower immediate risk than at the peak; it does not prove that normal physical supply has resumed. Oil, diesel and LNG prices can remain elevated while tanker traffic, insurance conditions, refinery inputs and gas deliveries are still impaired.

For governments, unwinding emergency measures requires more than preliminary diplomatic engagement. They need evidence of sustained, secure passage through the strait, reliable shipping and insurance, and restored energy flows. Until those conditions are durable, governments and businesses still have reasons to preserve contingency fuel plans, seek alternative supply and protect consumers from the most abrupt price increases.

The core lesson is that this is not only an oil-price story. It is a combined disruption of crude, LNG, refined fuels and maritime logistics—and those connected pressures can outlast a temporary decline in the Brent benchmark. 913