Experts weigh potential scenarios for oil if Strait of Hormuz closes
Tankers are seen at the Khor Fakkan Container Terminal, the only natural deep-sea port in the region and one of the major container ports in the Emirate of Sharjah, along the Strait of Hormuz, a waterway through which one-fifth of global oil production passes, on June 23, 2025.
Giuseppe Cacace | AFP | Getty Images
Oil markets are bracing for a possible supply shock after a US attack on Iran at the weekend reignited fears that flows through the Strait of Hormuz could be disrupted.
While analysts expect a sudden “spike” reaction to oil prices when trade resumes in New York on Sunday evening, the bigger question is whether the tensions will lead to a sustained disruption of Gulf exports.
“At this point, it appears we are facing a full-scale military conflict between the United States and Iran that is unprecedented and whose trajectory is impossible to assess,” said Vandana Hari, CEO of energy research firm Vanda Insights.
“We’re looking at worst-case scenarios for oil, including a major disruption to the flow of oil in the Middle East if full-blown retaliation by Iran and its proxies continues for days,” Hari told CNBC. However, this will be possible unless the United States can disarm the Iranian navy and army in advance and ensure that tanker traffic in the Strait of Hormuz continues to flow normally.
As tensions escalate, attention has turned to the Strait of Hormuz, where any disruption would have immediate and massive consequences on global oil and LNG flows.
Oil prices on an annual basis
According to Kpler data, the strait located between Oman and Iran serves as a critical transit route and potential transit point for global crude oil; Approximately 13 million barrels per day will pass through this strait in 2025, equivalent to approximately 31% of all seaborne oil flows.
It connects the Gulf’s major producers, such as Saudi Arabia, Iran, Iraq and the United Arab Emirates, to the Gulf of Oman and the Arabian Sea.
Reuters reported on Saturday Aspides, an official with the European Union’s naval mission, said commercial ships received VHF radio messages from Iran’s Revolutionary Guard warning that “no ships are allowed to pass through the Strait of Hormuz.”
The official was quoted as saying that Tehran had not officially approved any directive to block the waterway.
Early indications point to a broader attack on Iran and counter-attacks could escalate to include multiple Gulf states.
Reuters noted that Iran has repeatedly threatened to block the narrow pass over the years in response to attacks on the Islamic Republic.
Iran has repeatedly threatened in the past to close the narrow pass in response to attacks on the Islamic Republic.
Rapidan Energy Group President Bob McNally, who has been telling customers for weeks that there was a 75 percent chance of conflict, called it a “very serious development” for world oil and gas markets, given their dependence on Hormuz production and flows.
Industry veterans emphasized that the bigger issue is time. The size of any increase in oil and LNG prices will depend on the duration and extent of any disruption to production and flows in the Gulf, McNally said.
Worst case scenario?: Oil reaches triple digits
Analysts say potential scenarios range from limited disruptions to Iranian exports to a complete blockade of Hormuz.
The nightmare for global markets is not just the missing Iranian barrels but also the broader disruption of shipping through the Bosphorus.
“Early indications suggest a broader attack on Iran, and counter-attacks could escalate to include multiple Gulf states,” said Saul Kavonic, head of energy research at MST Marquee.
Kavonic said markets will initially price in risks ranging from the loss of up to 2 million barrels per day of Iranian exports to attacks on regional infrastructure or, in the extreme case, disruption of transit through Hormuz.
“If the Iranian regime feels it faces an existential threat, attempts to block the Strait of Hormuz cannot be ruled out,” he said, but added that the United States and its allies would likely deploy military escorts to protect shipping lanes.
An infographic titled “Strait of Hormuz” was created in Ankara on June 17, 2025.
Anatolia | Anatolia | Getty Images
If Iran manages to close the Strait, the consequences for global oil markets could be serious.
“This could present a scenario three times as severe as the Arab oil embargo and the Iranian revolution of the 1970s, pushing oil prices into triple digits, while LNG prices could retest record highs in 2022,” Kavonic said. he said.
Brent crude oil It settled at $72.48 on Friday, extending its year-to-date gain to nearly 19%. WE West Texas Intermediate (WTI) closed at $62.02, up roughly 16% so far this year.
Andy Lipow, president of Lipow Oil Associates, said that although Iranian oil facilities have not been directly targeted so far, the attacks would significantly increase the risk of disruption to oil supplies in the region.
Lipow described the worst outcome as “an attack on Saudi oil infrastructure followed by a complete closure of the Strait of Hormuz.” He estimates the likelihood of this scenario at around 33 percent, given that Iran may feel backed into a corner.
