This is a chokepoint disruption that can evolve into a supply shockUnlike the Russia-Ukraine crisis in 2022, the current crisis initially disrupts the transport of energy rather than production itself. Roughly 20% of global oil trade and around 20% of LNG shipments transit the Strait of Hormuz, concentrating multiple exporters behind a single maritime corridor. If the disruption persists, however, the logistics shock can quickly translate into a global supply shock. Duration determines whether this becomes a market shock or a systemic crisisA short disruption initially produces financial and insurance risk premia, pushing oil sharply higher and tightening LNG markets while most physical supply continues to reach markets. As disruption persists, markets begin to price in physical availability constraints, with oil moving above 100/bbl, LNG markets becoming extremely tight, and macroeconomic spillovers comparable to the early phase of the 2022 energy crisis. Oil and LNG price shocks will be global, but physical shortages may be regionalOil trades in a highly integrated global market, meaning disruption in the Strait of Hormuz would quickly translate into higher prices worldwide. LNG prices would also rise globally as Asian and European importers compete for cargoes, but the most import-dependent countries, particularly lower-income LNG buyers, face the greatest risk of physical shortages or being priced out of the market.
Bayoumi et al. (Tue,) studied this question.