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As of May 21, 2026, the Strait of Hormuz is effectively closed to shipping traffic.
If the Strait of Hormuz remains closed for another month, oil prices are projected to reach $150 to $200 per barrel.
The current closure of the Strait of Hormuz is the most significant event in the oil market since World War II, surpassing the crises of the 1970s.
The initial price spike from the Strait of Hormuz closure was mitigated by large, coordinated releases from strategic petroleum reserves by the US, other IEA member countries, and China.
The closure of the Strait of Hormuz has reduced global oil production from 105 million barrels per day to approximately 95 million barrels per day.
Within five years, the Strait of Hormuz will be removed as a major chokepoint for the global oil market as Gulf producers like Saudi Arabia, the UAE, and Iraq will build overland pipelines to bypass it.
LNG facilities in Qatar have been damaged by drones during the conflict, and repairs could take three to four years.
Even if a peace deal is declared today, the restart process for oil production and shipping through the Strait of Hormuz will take one to two months to approach full recovery.
The United Arab Emirates has left the OPEC oil cartel.
Sustained oil prices of $150 per barrel for even a few months would be sufficient to trigger a global recession.
There is a greater than 50% probability that oil prices will reach $150 to $200 per barrel within the next two months.
Major oil companies like BP, Shell, and Exxon have improved their working capital efficiency by 20-30% over the last five years, reducing their need to store oil.