Hormuz disruption hits 18.4 million barrels daily oil flow, 110 bcm of annual LNG trade

The Strait of Hormuz has been effectively closed since late February 2026 following a US-Israel military conflict with Iran, with the Iranian Revolutionary G...

What Happened

The Strait of Hormuz has been effectively closed since late February 2026 following a US-Israel military conflict with Iran, with the Iranian Revolutionary Guard Corps (IRGC) blocking passage for vessels linked to the US, Israel, and allied nations.
The closure has disrupted approximately 18.4 million barrels per day (mb/d) of crude oil flows — roughly 18–20% of global seaborne oil trade that transited the strait before the crisis.
About 110 billion cubic metres (bcm) of annual LNG trade has been disrupted, representing nearly 20% of global LNG trade, with Qatar's Ras Laffan LNG facility operating at reduced capacity following damage.
Brent crude crossed $100 per barrel on 8 March 2026 — for the first time in four years — and peaked at $126/barrel, while Asian LNG spot prices surged above $25 per MMBtu.
The Energy Transitions Commission (ETC), in its report "Lessons on Energy Security after the Hormuz Crisis" (May 15, 2026), estimated the crisis could add $1–2 trillion in additional global fuel expenditure in 2026 alone.

Static Topic Bridges

Strategic Chokepoints and Global Energy Trade

A maritime chokepoint is a narrow, strategically significant waterway through which a large volume of global trade passes. The Strait of Hormuz, located between Iran's southern coast and Oman's Musandam Peninsula, is approximately 167 km long and 39 km wide at its narrowest navigable channel. It is the sole sea passage connecting the Persian Gulf to the Gulf of Oman and the open ocean, making it the world's most critical energy chokepoint.

Prior to the 2026 crisis, approximately 20 million barrels per day (mb/d) of crude oil transited the strait — roughly 20–25% of global seaborne oil trade.
About 20% of global LNG trade passed through, with 93% of Qatar's and 96% of UAE's LNG exports transiting the strait.
Asian nations absorbed 84% of all crude shipments through the strait; China received one-third of its oil via this route; Japan sourced 70% of its Middle Eastern oil through Hormuz.
Other critical global chokepoints include the Suez Canal (Egypt), Strait of Malacca (Southeast Asia), Bab-el-Mandeb (Yemen-Djibouti), Cape of Good Hope (South Africa), and the Danish Straits.

Connection to this news: The closure of the Strait of Hormuz has validated long-standing warnings about chokepoint concentration risk in global energy systems, directly affecting India which imports over 85% of its crude oil requirements.

UNCLOS and the Right of Transit Passage

The United Nations Convention on the Law of the Sea (UNCLOS, 1982) is the international legal framework governing maritime navigation. It distinguishes between two passage regimes for straits used for international navigation.

Article 17 (Innocent Passage): Right of all ships to pass through a coastal state's territorial sea continuously and expeditiously, without prejudice to peace, good order, or security. Can be suspended by the coastal state temporarily for security reasons.
Article 38 (Transit Passage): Applies specifically to "straits used for international navigation." Unlike innocent passage, transit passage CANNOT be suspended by coastal states — it is a non-suspendable right.
The Strait of Hormuz qualifies as an international strait under UNCLOS Article 37 (straits between one part of the high seas/EEZ and another part).
Iran is not a party to UNCLOS and historically argues for a more restrictive "innocent passage" regime, requiring prior notification for warships.
The 2026 closure thus constitutes a violation of the transit passage principle recognized by UNCLOS signatories.

Connection to this news: India's support for "open Strait of Hormuz navigation" (as expressed during the May 2026 UAE visit) is rooted in UNCLOS principles of transit passage — a testable distinction between innocent passage and transit passage for Prelims.

Energy Security: India's Structural Vulnerability

Energy security refers to the availability of adequate, affordable, and reliable energy supplies. India is structurally vulnerable to Middle Eastern supply disruptions: it imports over 85% of its crude oil, of which roughly 60% originates from the Middle East and West Asia.

India's import dependence on oil: over 85% of domestic crude requirements are met through imports.
Top oil suppliers to India (pre-crisis): Russia, Iraq, Saudi Arabia, UAE, Kuwait — nearly all routed through or near the Persian Gulf.
India's Strategic Petroleum Reserves (SPR) through Indian Strategic Petroleum Reserves Limited (ISPRL): total capacity of 5.33 MMT at three underground locations — Visakhapatnam (1.33 MMT), Mangaluru (1.5 MMT), Padur/Udupi (2.5 MMT).
SPR provides approximately 9.5 days of consumption cover; combined with Oil Marketing Company (OMC) storage, total national cover is approximately 74 days.
The Energy Transitions Commission argues the crisis demonstrates why diversifying away from fossil fuels is a structural energy security imperative, not merely an environmental one.

Connection to this news: The 18.4 mb/d disruption and $100+ Brent prices directly impact India's current account deficit (CAD), inflation (especially fuel and food), and fiscal deficit (through fuel subsidies and OMC losses) — all GS Paper 3 themes.

LNG as a Strategic Commodity

Liquefied Natural Gas (LNG) is natural gas cooled to −162°C for shipment as a liquid. It allows natural gas to be traded globally like oil, decoupling supply from pipelines.

Global LNG trade in 2025: approximately 560+ bcm; Qatar was the world's second-largest LNG exporter with over 112 bcm in 2025.
Ras Laffan Industrial City in Qatar hosts the world's largest LNG production complex; damage in 2026 reduced capacity by approximately 17%.
Asian LNG spot prices above $25/MMBtu represent a severe shock for import-dependent economies including Japan, South Korea, India, and China.
The ETC report warns that concentrated LNG infrastructure creates "non-diversifiable" risk — a structural vulnerability distinct from oil, which has more alternative routes.

Connection to this news: India's new LPG agreement with the UAE (May 2026) and ongoing push to diversify LNG supply sources are direct policy responses to this structural vulnerability.

Key Facts & Data

18.4 million barrels per day (mb/d): approximate oil flow disrupted through the Strait of Hormuz in 2026.
110 bcm: annual LNG trade disrupted by the Hormuz closure.
20% of global seaborne oil trade and 20% of global LNG trade transited the strait pre-crisis.
Brent crude exceeded $100/barrel on 8 March 2026; peaked at $126/barrel.
Asian LNG spot prices exceeded $25/MMBtu during the crisis.
$1–2 trillion: ETC estimate of additional global fuel expenditure in 2026 if prices sustained.
84%: share of Hormuz crude shipments absorbed by Asian nations pre-crisis.
93% of Qatar's and 96% of UAE's LNG exports transit the Strait of Hormuz.
India's SPR capacity: 5.33 MMT at Visakhapatnam, Mangaluru, and Padur — approximately 9.5 days of cover.
UNCLOS Article 38 guarantees non-suspendable transit passage through international straits.
Iran is not a party to UNCLOS and disputes the transit passage doctrine.