Oil, the Strait of Hormuz and fears of a global economic shock
The intensification of the war with Iran has once again placed the Strait of Hormuz at the center of the world's attention, the narrow sea passage between Oman and Iran through which one of the most important energy flows on the planet passes. At a time when oil prices have risen sharply and tanker and liquefied natural gas vessel traffic has been seriously disrupted, markets are reacting not only to war news but also to the possibility that a local conflict could grow into a global economic problem. That is precisely why the question of the Strait of Hormuz is no longer only a military or geopolitical topic. It has also become a question of inflation, fuel prices, supply security, transport costs and the resilience of the global economy to a new energy shock.
Why the Strait of Hormuz is so important
The U.S. Energy Information Administration, EIA, states in its latest analysis that during 2024 and in the first quarter of 2025, volumes passed through the Strait of Hormuz that accounted for more than a quarter of total global seaborne oil trade and around one fifth of global consumption of oil and petroleum products. In addition, approximately one fifth of global trade in liquefied natural gas also passes through this route, primarily from Qatar. In other words, this is a point through which not only an enormous quantity of crude oil passes, but also an important part of the gas market, and that means that any longer disruption very quickly ceases to be a regional problem.
Additional weight to this fact is given by the structure of buyers. According to the EIA's estimate, more than four fifths of crude oil and condensate and more than four fifths of LNG that passed through the Strait of Hormuz in 2024 ended up in Asian markets. The most exposed are major energy importers such as China, India, Japan and South Korea. This means that a more serious and prolonged interruption of navigation would first hit the most industrially and commercially dynamic part of the world, and then the consequences would spill over to Europe and the rest of the global economy through more expensive energy, more expensive transport and more expensive financing.
War escalation and traffic almost brought to a halt
The latest data and reports on the situation on the ground indicate that the market is not reacting to a theoretical risk, but to a concrete disruption. Reuters reported on March 2, 2026, that at least five tankers had been damaged in the wider area of the Strait of Hormuz, that two crew members had been killed, and that around 150 vessels, including oil and LNG tankers, had been left stranded or at anchor in the surrounding waters. The same report states that traffic through the passage had almost come to a standstill after strikes on vessels and a rise in security risk. This is no longer just psychological pressure on the market, but a real stoppage in the physical movement of goods.
Another important layer of the crisis comes from the insurance sector. As Reuters states, leading marine insurers began cancelling war-risk insurance for vessels in the Gulf, and premiums rose sharply within a very short time. When war risk suddenly becomes much more expensive or insurance temporarily disappears from the market, the effect is not limited to a few tankers. Then the price of every transport rises, some shipowners postpone voyages, and some cargo remains waiting for a safer passage. In practice, this means that energy products may formally exist on the market, but they do not reach buyers at the speed and by the route to which the economy is accustomed.
Why even alternative routes cannot fully solve the problem
At first glance, it might seem that producers from the Persian Gulf will simply redirect part of their oil through other routes. However, official data show that these possibilities are limited. The EIA estimates that Saudi Arabia and the United Arab Emirates together have around 2.6 million barrels per day of available pipeline capacity that can partially bypass the Strait of Hormuz. This is an important safety valve, but it is still far less than the volumes that normally pass through the strait. Saudi Arabia has the East-West crude oil pipeline to the Red Sea, and the UAE has a route to the Fujairah terminal on the Gulf of Oman, but these systems are not a magical solution for the complete replacement of maritime traffic through Hormuz.
That is precisely why analysts who monitor maritime traffic also warn that there are no truly equivalent alternatives for the volume that normally passes through this narrow sea corridor. In other words, alternative routes can soften the blow, but they cannot neutralize it. If the disruption lasts, the market sooner or later begins to build a risk premium into the price of every barrel, every cubic meter of gas and every transport contract.
The rise in the price of oil as the first signal of a broader problem
The first and most visible consequence of the crisis is the rise in oil prices. Reuters reported already at the start of the escalation on a jump in Brent crude of up to 13 percent within one wave of market reaction, while later market reports this week showed that Brent was trading above the level of 80 dollars per barrel, with the largest weekly rise in several years. The figure of 80 or 85 dollars itself may not seem dramatic compared with historical records, but the problem lies in the dynamics and in the fact that the increase is coming at a moment when inflation in many countries has only been partially brought under control.
The oil market is not looking only at the current shortage, but also at the risk that the crisis will last, that more tankers will be hit, that some producers will temporarily reduce deliveries, or that buyers will begin stockpiling inventories. When that is combined with higher insurance and shipping service costs, the price of energy gets an additional push that is not necessarily linked only to production, but also to logistics itself. In such circumstances, even in countries that are not directly dependent on imports from the Persian Gulf, energy becomes more expensive because the global market sets prices globally, not locally.
How the energy shock spills over into inflation
The link between the rise in oil prices and inflation is not mechanical, but it is very clear. Fuel is an input cost for transport, agriculture, industry, aviation and a large part of logistics. When oil becomes more expensive, that increase, with a certain lag, enters the prices of freight transport, airline tickets, heating, food production, packaging and distribution. Particularly sensitive are sectors that operate with small margins and a high share of transport costs, because there companies do not have much room to absorb the increase in costs without raising prices for end consumers.
In its January assessment of the global economy for 2026, the International Monetary Fund starts from the assumption that global inflation will continue to decline, but at the same time warns that geopolitical escalations are among the key downside risks to price stability and growth. In other words, the baseline scenario before this new military crisis was relatively calmer, with expected global economic growth of 3.3 percent in 2026. If energy products now become sharply more expensive again, central banks and governments enter an awkward position: the fight against inflation becomes more difficult precisely at the moment when the economy is seeking cheaper financing and more predictable business conditions.
That is the reason why markets and economists mention war, inflation and possible slowing growth in the same sentence. Higher energy prices raise costs for both households and companies. Households then spend more money on fuel, heating and bills, leaving less for other consumption. Companies see their margins reduced, investments postponed and pressure on product prices increased. If central banks therefore keep higher interest rates for longer, the slowdown intensifies further.
Supply chains under new pressure
After the pandemic and disruptions in the Red Sea, global supply chains have already shown how sensitive they are to narrow transport bottlenecks. The Strait of Hormuz is now emerging as another point through which the security of global trade is refracted. The problem is not only that oil and gas are transported through the passage. The problem is also that more expensive fuel and more expensive insurance increase the costs of broader maritime traffic, and thus indirectly affect goods that have no direct connection with energy products.
An additional risk comes from industries that depend on petroleum products and gas as raw materials. Analysts' warnings in recent days do not relate only to pumps and fuel bills, but also to petrochemicals, fertilizers and aviation fuel. Financial newspapers have reported a sharp rise in kerosene prices, and such a development particularly affects air traffic, carriers and high-value logistics chains. When energy becomes more expensive across several connected markets at once, the blow is felt not only in one item of the consumer basket, but across a whole range of products and services.
Asia is first in the line of fire, but Europe is not spared
Because of geography itself and trade routes, Asia will feel the greatest immediate blow. China, India, Japan and South Korea are among the largest destinations for oil passing through Hormuz, so any longer slowdown or interruption of deliveries means greater pressure on refineries, energy security and import costs for them. This is especially important for industrial economies that rely heavily on stable supply and predictable energy prices.
Europe, however, is far from a safe observer. Even when it does not physically depend decisively on the same volumes as Asia, Europe feels the world price of oil and gas, as well as the effect of more expensive sea and air transport. This is also important for Croatia, where changes in the global oil market are, as a rule, reflected with a certain time lag in retail fuel prices and in the broader inflationary sentiment of citizens and companies. In open economies, the effect of global energy products rarely remains outside domestic prices.
How much more resilient is the global economy today than in previous crises
Compared with earlier decades, the global economy today is more resilient in some segments. The United States, for example, is significantly less dependent on imports from the Persian Gulf than it was several decades ago. The EIA states that in 2024 about 0.5 million barrels per day reached the U.S. through Hormuz, which was about 7 percent of total U.S. imports of crude oil and condensate and about 2 percent of U.S. consumption of petroleum liquids. This is the lowest level in almost forty years, primarily because of stronger domestic production and greater reliance on Canadian supplies.
But that change does not mean that the danger to the global economy has disappeared. Even if some major economies are less directly exposed to a physical shortage, they still suffer the consequences of a globally formed price. Oil is not sold in separate national universes. If the passage through one of the world's most important energy arteries is seriously disrupted, the price rises for everyone, and with it uncertainty in financial markets. Because of this, even countries that today have greater energy autonomy cannot remain completely insulated from the shock.
Can strategic reserves soften the blow
One of the reasons why the market is not yet talking about an immediate collapse in supply is the existence of strategic reserves and emergency response mechanisms. The International Energy Agency reminds that its members must hold stocks equivalent to at least 90 days of net imports and be ready for a coordinated response in the event of a serious supply disruption. This is an important instrument for extinguishing panic and mitigating the blow in the short term, but even strategic reserves are not a permanent substitute for the normal functioning of key trade routes.
History shows that releasing reserves can help the market bridge the most critical weeks and calm prices, but it cannot compensate in the long term for a large and prolonged stoppage in deliveries from the Persian Gulf. If the crisis were to last, the focus would very quickly shift from the question of whether there is oil in storage to the question of how long the world can live with permanently more expensive energy, more expensive transport and weaker investment security.
The greatest risk is not only the price, but the duration of the crisis
In such situations, markets usually first react to the headline and the shock, and then try to assess the duration. It is precisely the duration that is the key to everything. A short interruption of navigation, with a rapid calming of the security situation, could remain limited to a strong but temporary price jump. But a longer stoppage, new attacks on tankers or the spread of the conflict to the infrastructure of oil and gas producers would open a completely different scenario. Then it would no longer be only about nervousness on the exchanges, but about a more prolonged energy and inflationary wave.
That is why today's crisis is not measured only by the number of damaged ships or the daily movement in Brent crude. It is measured by the question of whether the global economy, which has already gone through pandemic inflation, supply-chain disruptions and high interest rates, can withstand another serious external shock. According to available information, there is still no final answer. But it is already clear that the war with Iran and the disruption of traffic through the Strait of Hormuz are not an isolated regional story. They are a test of the resilience of the global economy, and the outcome of that test will depend on whether navigation and insurance normalize quickly or whether the world will face a new period of more expensive energy, more stubborn inflation and slower growth.
Sources:- U.S. Energy Information Administration – analysis of the importance of the Strait of Hormuz for global trade in oil and LNG and of limited alternative routes.
- International Monetary Fund – January assessment of the global economy for 2026, with a warning that geopolitical escalations remain an important risk to inflation and growth.
- World Bank – overview of developments in commodity markets and forecasts for 2026, with the note that geopolitical tensions may alter expectations for energy prices.
- International Energy Agency – overview of energy security mechanisms and the role of strategic reserves in the event of serious supply disruptions.
- International Energy Agency – data on the obligation of members to maintain oil stocks at a level of at least 90 days of net imports.
- Reuters / Virginia Business – report from March 2, 2026, on damaged tankers, ships held in the area of the Strait of Hormuz and rising war insurance costs.
- CBS News / AP – overview of the consequences of slowing traffic through Hormuz and experts' assessment that alternative routes can cover only part of the usual flows.
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