Strait of Hormuz Disruption Is Eroding Oil Market Buffers

The central consequence of the Strait of Hormuz crisis is not simply that fewer barrels are moving. It is that the global system has been relying on temporary workarounds—emergency stocks, inventory drawdowns, demand restraint and rerouted exports—rather than restoring normal transport capacity.

Before the conflict, roughly 20 million barrels per day of oil and petroleum products moved through the strait. Subsequent estimates of actual flows have varied, but they all describe a severe interruption: the IEA reported an average of 2.7 million barrels per day in March through May, while later shipping data showed only four commodity vessels transiting on September 18.

The market’s safety net is getting thinner

Oil supply shocks can initially be absorbed without an equal-sized loss of consumption. Governments can release strategic stocks; traders can draw commercial inventories; refiners can reduce runs; and producers can redirect some exports through alternative routes. These measures buy time, but they do not replace a reliable shipping corridor.

The IEA says member countries agreed in March to its largest-ever emergency oil-stock release in response to the disruption. 15 Meanwhile, cumulative Middle East supply losses had exceeded 1.3 billion barrels by August, according to the agency. The implication is straightforward: each drawdown reduces the inventory available to absorb the next outage.

The available data also show why estimates of the remaining supply gap differ. Measures of departures from the Persian Gulf, flows through Hormuz and total crude availability are not the same thing; they also change as shipowners alter routes, use ship-to-ship transfers or avoid reporting positions. Rather than treating any single estimate as definitive, the more durable conclusion is that normal trade flows have not been restored. 4 12

Saudi Arabia’s bypass route was a critical offset

Saudi Arabia’s East-West pipeline links eastern oil fields to the Red Sea export hub at Yanbu, allowing crude to avoid Hormuz. During the first five months of the conflict, west-coast exports through that route rose to roughly 4 million to 5 million barrels per day, according to Reuters. 3

That made the pipeline one of the most important pressure valves in the global system. Its shutdown after drone attacks therefore removed capacity precisely when the market had few easy alternatives. Reuters reported that the attack knocked out the pipeline and that Brent settled at $105.68 per barrel on September 14 amid renewed supply concerns. 17

Stored crude at Yanbu can support exports for a short period, but it is not a substitute for a functioning pipeline. Reuters reported estimates that available oil there could maintain exports for only five to seven days if the outage persisted. Repair timing is uncertain: U.S. officials described the interruption as brief, while independent assessments cited the possibility of weeks.

Why higher U.S. exports cannot fully close the gap

The United States can add supply to world markets, but it cannot instantly reproduce the Gulf’s mix of crude grades, export terminals, tankers and refinery output.

Crude oil must be transported, loaded, matched to refinery configurations and turned into usable products such as diesel, jet fuel and gasoline. A shortage of refined products can persist even when extra crude is available elsewhere. Columbia University’s Center on Global Energy Policy noted that U.S. refiners had exported record volumes, reducing domestic product inventories, while operating close to practical limits; U.S. distillate stocks were about 13% below their five-year average.

That is why more U.S. production or exports help at the margin but do not automatically solve a transport-led disruption. The bottleneck is not only upstream supply. It is also logistics and downstream processing capacity.

China’s reduced imports bought time—but may not keep doing so

China provided an important early cushion by cutting net crude imports and relying more on domestic inventories and lower refinery activity. The Center on Global Energy Policy estimated that China’s net crude imports fell 30% year on year in the second quarter of 2026, equal to 3.5 million barrels per day.

That reduced competition for available non-Gulf barrels and softened the immediate global price impact. But it was a finite demand-side adjustment, not a new source of supply.

By August, China’s refinery throughput had risen for a second consecutive month, supported by fuel exports after Beijing eased export restrictions in mid-July, Reuters reported. China still has inventories and policy flexibility, but higher refining activity means the earlier import restraint cannot be assumed to offset disruptions indefinitely.

LNG faces the same maritime-security problem

The oil crisis also illustrates a broader energy-security problem: when insurers, crews and shipowners consider a route unsafe, physical production capacity may be stranded even if wells, pipelines and liquefaction plants remain intact.

Reporting from Brookings described insurance as unavailable or prohibitively expensive for vessels transiting Hormuz and said seafarers were unwilling to make the journey. 2 Gas buyers face less flexibility than oil buyers because LNG depends on specialized ships, receiving terminals and contract-linked supply chains. The practical response is therefore diversification: more flexible supply contracts, alternative pipeline links where available, regasification capacity, storage and lower exposure to a single maritime chokepoint.

What the oil-price outlook depends on

The wide range of price scenarios reflects two different assumptions about the crisis.

A higher near-term oil-price case rests on continuing attacks, restricted tanker traffic, prolonged loss of bypass capacity and further inventory drawdowns. Brent was still at $104.87 per barrel on September 18, and prices had approached four-month highs earlier that week as concerns grew over the damaged Saudi pipeline and disrupted Yanbu loadings.

A much lower longer-term case requires a different world: a credible restoration of safe shipping, repair and restart of export infrastructure, normalization of insurance and tanker availability, and enough time to rebuild inventories. It could also require weaker demand or renewed oversupply outside the Gulf.

Those outcomes are not contradictory. The first prices an unresolved physical bottleneck; the second prices its removal. Until transit security and alternative export routes are credibly restored, the market remains more exposed to upside shocks than the headline price alone may suggest.