Key Oil Route Spotlighted as U.S. Considers Iran Action

• About 31% of global seaborne crude (13 million barrels per day) transits the Strait of Hormuz, with Chinese refiners particularly exposed to potential disruptions
• Analysts estimate oil prices could surge $10-20 per barrel in a complete closure scenario, though most see 70% likelihood of only selective U.S. strikes rather than full military confrontation
• Experts note Iran likely lacks capability to fully close the strait given U.S. naval presence, and current oil market oversupply of 2.5-3 million barrels per day could cushion impact

Summary: Key Oil Route Spotlighted as U.S. Considers Iran Action

Key Development:

Oil markets are focused on the Strait of Hormuz amid reports that President Trump is considering military options against Iran following crackdowns on domestic protests. The waterway represents a critical energy chokepoint through which approximately 13 million barrels per day of crude oil transit—roughly 31% of global seaborne crude flows.

Market Impact:

Analysts warn that a full closure could spike oil prices by $10-$20 per barrel. Currently, Brent crude hovers around $63 per barrel and U.S. futures at $59 per barrel. Any disruption could trigger a global oil and gas crisis, particularly affecting Chinese refiners who would need to seek alternative supplies.

Risk Assessment:

Bob McNally of Rapidan Energy Group estimates a 70% likelihood of selective U.S. strikes on Iran. However, most analysts view catastrophic outcomes as low-probability events. Iran's capability to fully close the strait is questioned given U.S. naval presence in the region. Saul Kavonic of MST Marquee predicts an "immediate oil price spike" following any U.S. attack, though prices would soften if disruptions prove temporary.

Market Context:

Kpler estimates current oil market oversupply at 2.5 million barrels per day in January, rising to over 3 million barrels per day in February-March, which could cushion price impacts. Even temporary disruptions like tanker harassment would have limited physical supply impact.

Strategic Comparison:

Experts note Iran differs significantly from Venezuela due to geographic distance from U.S. soil and Middle East geopolitical complexity. A Venezuela-style approach would more likely involve sanctions and enforcement rather than military occupation or infrastructure attacks.