Iran war disrupts nearly half of global oil flows as Strait of Hormuz traffic collapses

The Strait of Hormuz, a narrow waterway that normally handles between 18 and 21 million barrels per day of crude oil and refined products, has seen traffic collapse to between 2 and 9 million bpd. That single corridor accounts for roughly 20% of the world’s oil and refined product supplies, and six months into the US-Iran conflict, it’s operating at a fraction of its capacity.

Middle Eastern oil exports have been cut roughly in half. The region is now averaging about 9.5 million bpd, compared to nearly double that figure in 2025. Iran itself has been hit hardest: its crude exports have cratered by approximately 90%, falling to just 260,000 to 300,000 bpd under the weight of a US naval blockade and persistent threats to commercial shipping.

A chokepoint becomes a choke

Before the conflict escalated in late February 2026, around 130 to 140 commercial vessels transited the Strait of Hormuz every day. Current estimates put that number in the single digits on some days.

The disruption stems from multiple overlapping pressures. Iranian attacks on shipping vessels, the US naval blockade on Iranian ports, and instability along alternative routes like the Bab el-Mandeb Strait have all compounded to create a logistics nightmare for global oil flows. Even during a mid-June ceasefire, when transit volumes temporarily ticked higher, the relief proved short-lived. Hostilities resumed by July, and traffic levels sank back to their wartime lows.

Brent crude has responded accordingly, climbing from a pre-war range of $70 to $77 per barrel up to roughly $85 to $94.

The patchwork keeping markets afloat

Oil markets have adapted through a combination of pipeline rerouting, inventory drawdowns, and limited use of so-called “dark” shipping, vessels that disable tracking systems to move cargo through contested waters. Saudi Arabia has leaned on its Red Sea export infrastructure, while the UAE has pushed more volume through its Fujairah port facilities on the Gulf of Oman, bypassing the strait entirely.

Refined products are where the pain is sharpest. Unlike crude oil, which can be stockpiled in strategic reserves and rerouted through pipelines with relative flexibility, refined fuels like diesel and jet fuel depend on specific refinery-to-market supply chains. Global stocks of refined products are declining rapidly, and prices have climbed accordingly.

What elevated oil prices mean for broader markets

Sustained Brent prices above $85 per barrel create a challenging environment for central banks already navigating sticky inflation in several major economies. Higher energy costs feed directly into consumer price indices, complicating the path for rate cuts that equity markets have been pricing in.

For energy equities, the picture is more nuanced. Producers with assets outside the conflict zone, particularly US shale operators and companies with significant Latin American or West African exposure, stand to benefit from elevated prices and increased demand for non-Middle Eastern supply. But companies with refining operations dependent on Middle Eastern crude face margin compression if feedstock costs continue climbing without corresponding relief on the product side.

Countries in South Asia and parts of Africa that are net oil importers have seen local currencies weaken against the dollar, driving uptake of dollar-denominated stablecoins as a store of value.

Iran’s 90% export collapse translates to a massive revenue hit for Tehran, which relied on oil sales for a significant share of government spending.

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