How Much Oil is in the Strait of Hormuz?
Approximately 20 million barrels of oil pass through the Strait of Hormuz daily, according to estimates from the US Energy Information Administration (EIA), representing nearly US$600bn (£447bn) worth of energy trade annually.
This 21-mile-wide chokepoint between the Arabian Peninsula and Iran continues to function as the single most important factor in global economic stability.
While crude oil constitutes the bulk of this volume, the Strait also serves as a corridor for nearly five million barrels each day of refined fuels such as petrol and diesel. Additionally, it functions as the primary export route for approximately 20% of the world's Liquefied Natural Gas (LNG), predominantly sourced from Qatar.
These refined products and gas supplies prove particularly critical for Asian manufacturing hubs and European energy security.
A critical vulnerability point
The current geopolitical landscape has starkly highlighted the Strait's fragility. As insurance premiums for tankers skyrocket and global prices hover near US$119 per barrel, the message remains unmistakable: as long as the world runs on oil, the Strait of Hormuz continues to be the ultimate geographic trump card in global supply chain resilience.
The vulnerability became brutally apparent when Iraqi oil production from its main southern oilfields plummeted by 70% to just 1.3 million barrels per day, as the country found itself unable to export oil through the Strait of Hormuz due to regional conflict.
The primary manner in which Iranian oil impacts American fuel prices is through what could be termed the "Global Energy Pool." According to the EIA, Iran exports roughly 1.5 to 1.8 million barrels each day through a sophisticated "shadow fleet" of ageing tankers operating outside conventional commercial channels.
These vessels frequently engage in ship-to-ship transfers in the South China Sea or off the coast of Malaysia. During these transfers, Iranian crude is often blended with other oils and rebranded as "Malaysian" or "Middle Eastern" blends.
How Iranian oil influences prices
By satisfying massive demand in China, Iranian oil prevents those buyers from competing for the "clean" oil upon which the US relies, effectively lowering prices at American pumps. This indirect mechanism demonstrates how deeply interconnected global energy supply chains remain, regardless of political sanctions.
Karin Ström, VP at Proxima, says: "Recent freight disruption is uneven by mode, and it's important not to conflate operational noise with where the real cost impact is building.
"Ocean freight rates have increased mainly out of China, linked in part to China's role as a key buyer of Iranian oil in recent years. With Iran restricted in who it can sell to, China benefited from heavily discounted volumes, and any disruption or heightened risk in these flows is now feeding into Chinese export pricing and capacity dynamics."
The only occasion when physical Iranian oil officially enters US territory is through law enforcement action. In a Department of Justice (DOJ) report, officials confirmed the successful forfeiture of the tanker M/T Skipper, which was carrying 1.8 million barrels of crude linked to sanctioned entities.
Karin says: "Air freight is already feeling real pressure. Expect tighter space, higher load factors and rate increases on lanes touching the Middle East as capacity is rerouted or withdrawn. For example, India–US air freight capacity is down by roughly 25%, forcing flows via European hubs or across the transpacific.
"The real 'hangover' does not primarily come from ocean rates. It comes from energy. Rising oil prices will push BAFs higher and feed directly into diesel-driven road freight and parcel networks. Because fuel is typically treated as a floating element in these contracts, cost increases flow through to customer invoices quickly and quietly often within days.
"Right now, we are seeing disruption like there's no tomorrow. Tomorrow will come, but the pain won't be in ocean freight. It will arrive as a delayed, silent, fuel-driven cost hangover that works its way straight into P&Ls and, ultimately, end-customer pricing."
