Oil Market: How Likely Is a Protracted Closure of the Strait of Hormuz?

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Fitch Ratings 6.5
Market Research Firm
Angelina Valavina 7.0

Oil Market: How Likely Is a Protracted Closure of the Strait of Hormuz?

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there will be an immediate reaction to the market and it will be significant. So the risk premium will go up quite substantially. Strait of Hormuz handles 20M barrels/day with limited alternatives; any closure would create immediate supply disruption fears.

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Asks about circumstances for Strait of Hormuz closure and its impact on global oil prices.

Host
Angelina Valavina

Explains Strait of Hormuz handles 20M barrels/day (25% of global seaborne oil trade, 20% of consumption). Alternative pipelines limited (Saudi 5M bpd, UAE 1.8M bpd). Protracted closure would have material market repercussions but is highly unlikely due to economic interdependence.

Half of exports from Saudi/UAE, other half from Iraq/Kuwait/Iran. Half of volumes go to China/India. Closure would negatively impact both exporters and importers.
Follows up asking about price impact even for temporary blockage.

Host
Angelina Valavina

States there would be immediate, significant market reaction with substantial risk premium increase, but reaction would subside depending on duration of closure.

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