Even if shipping through the Strait of Hormuz resumes partially, the oil market would still face significant disruption. “The idea that things return to normal once ships start moving again is misleading,” said Neil Crosby, AVP Oil Analytics at Sparta. “Even if the Strait operates at around 80% of normal capacity, that still represents a huge logistical shock for the global oil system.”
The Strait of Hormuz handles roughly a fifth of the world’s seaborne oil trade. Any reduction in traffic creates immediate bottlenecks across freight, refining supply chains and regional crude balances.
“At 80% flow you are still effectively removing millions of barrels per day from the system in practical terms,” Crosby said. “Insurance constraints, naval escorts, delays and rerouting all slow the movement of crude. That pushes up freight rates, widens regional spreads and forces refiners to compete harder for available barrels.”
The disruption would be felt most acutely in Asia, which relies heavily on Gulf crude supplies to keep refineries running. Many refineries hold only limited crude inventories, meaning delays in tanker arrivals can quickly translate into lower refinery runs and tighter product markets.
“Even if Hormuz reopens partially, the market still has to deal with the damage already done,” Crosby added. “Infrastructure outages, refinery attacks and wellhead shut-ins across the region will take time to reverse. The supply chain disruption doesn’t disappear the moment ships start sailing again.”
As a result, Crosby expects volatility to remain elevated even under a scenario where shipping gradually resumes.
“The market is not just pricing the closure of Hormuz,” he said. “It is pricing the cumulative damage to infrastructure and logistics across the region. That means prices, freight rates and refining margins could remain under pressure for weeks, even if traffic through the Strait begins to recover.”
Freight market
“The freight market is reacting less to the physical closure of routes and more to the uncertainty around them,” said Michael Ryan, Freight Commodity Owner at Sparta.
“In the early stages of the crisis the tanker market essentially froze. Charterers and owners struggled to price voyages because insurance, security conditions and loading schedules were all unclear. That created a temporary paralysis in fixtures.”
As trading activity resumes, the bigger structural shift is the redirection of crude and product flows away from the Gulf.
“What we’re already seeing is a move toward longer-haul supply chains,” Ryan said. “Refiners that normally source from the Middle East are looking instead to the Atlantic Basin - the US Gulf Coast, West Africa and the North Sea.”
Those alternative routes dramatically increase tonne-mile demand, the key driver of tanker earnings.
“A voyage that might normally take 10–15 days can suddenly become a month-long round trip,” Ryan said.
“That ties up ships for longer and effectively removes available vessels from the market.”
As a result, tanker markets may remain elevated even if geopolitical conditions stabilise.
“Once the trade map stretches, freight stays tight,” Ryan added. “Even if the crisis cools quickly, the disruption to shipping patterns and vessel availability could keep rates elevated for some time.”
Refining margins
“The market is now entering a phase where prices need to start rationing demand,” said Phil Jones-Lux, Senior Analyst for Sparta.
“If crude flows remain constrained, even partially, the system will struggle to keep refineries running at normal rates, particularly in Asia.”
Many Asian refiners depend heavily on Gulf crude, and any sustained disruption quickly translates into refinery run cuts.
“When crude supply becomes uncertain, refiners have two options: pay almost any price for available barrels or reduce throughput,” Jones-Lux said.
The pressure is already visible in refined product markets, particularly in jet fuel and middle distillates.
“Jet is the first place the system breaks,” he said. “It’s largely straight-run from crude and difficult to store, which means supply shortages show up there very quickly.”
As a result, refining margins and product spreads may need to rise further to rebalance the market.
“Ultimately the market has to do two things at once: encourage any available refining capacity to run harder while also destroying some demand,” Jones-Lux said.
“That’s why we’re seeing such extreme moves in cracks and regrades. They’re the market’s way of rationing scarce supply.”
Read the latest issue of World Pipelines magazine for pipeline news, project stories, industry insight and technical articles.
World Pipelines’ March 2026 issue
The March 2026 issue of World Pipelines opens with a keynote focus on CCS pipelines. From there, we move into construction and project delivery, with insights from Saudi Aramco and CRC Evans, alongside features on safer construction practices and smarter backfilling. We also cover pig launchers and traps, modern pressure testing, hot tapping, valves, integrity management, coatings and corrosion mitigation. We close by looking ahead, examining how AI, automation, and digital service strategies are helping operators future-proof critical pipeline infrastructure in an evolving energy landscape.