- Brent crude prices surged toward $120 a barrel amid Strait of Hormuz disruption fears
- About 20 million barrels per day, 20% of global oil, pass through the Strait of Hormuz
- Asia, including China and India, would face the biggest impact from any supply disruption
Brent crude is back in crisis mode. Prices have rocketed toward $120 a barrel in just days, reviving comparisons with the oil shocks of the 1970s as traders scramble to price in what a prolonged disruption in the Strait of Hormuz could do to a market that now burns roughly 100 million barrels of oil a day.
At the centre of the panic is a single chokepoint.
According to the U.S. Energy Information Administration, roughly 20 million barrels of oil and petroleum liquids move through the Strait of Hormuz every day, equal to about 20% of global consumption and more than a quarter of the world's seaborne oil trade. LIVE UPDATES
Most of those barrels flow to Asia. China, India, Japan and South Korea together take well over half the crude passing through the strait, meaning any sustained disruption would hit Asian economies first and hardest.
That risk has been amplified by a viral chart from The Kobeissi Letter, a market newsletter which warns that a complete shutdown of Hormuz could trigger “the largest oil supply shock in history.”
The scale is staggering.
Roughly 20 million barrels per day of oil supply would theoretically be at risk. By comparison, the oil embargo during the Yom Kippur War in 1973 removed about 4–5.5 million barrels a day from global markets. The Iranian Revolution of 1978–79 disrupted roughly 5–6 million barrels, while the Iran–Iraq War starting in 1980 knocked out about 4 million barrels daily.
In raw volume terms, a full Hormuz blockade would dwarf each of those shocks.
But there's a catch.
The 20‑million‑barrel figure is a worst‑case ceiling, assuming every tanker crossing the strait is suddenly stranded. In reality, some shipments would likely continue and regional producers such as Saudi Arabia and the United Arab Emirates can reroute limited volumes through pipelines that bypass the strait. Strategic reserves could also cushion the blow.
Still, even partial disruption could send prices spiralling, and for oil importers like India, the damage would come primarily through price rather than physical shortages.
India imports nearly 85% of the crude it consumes, leaving the economy exposed to global price swings. Research from the Reserve Bank of India suggests that a 10% rise in crude prices can push inflation higher and shave growth in the short run.
If Brent's surge toward $120 proves temporary, the shock may remain manageable.
But if the rally extends into a 20–30% sustained spike, economists warn the ripple effects could run through inflation, fiscal balances and financial markets.
The deeper vulnerability is structural.
The global oil system has effectively concentrated a fifth of its supply through a single narrow shipping lane with limited redundancy. If that artery were ever fully blocked for an extended period, the supply shock could exceed anything seen in modern energy markets.
The real question now haunting traders is not whether the risk exists, but how long the Strait of Hormuz stays vulnerable and how high prices will have to go before the world finds out where this shock's ceiling really is.
