The Strait of Hormuz — a 33-kilometer-wide channel through which roughly 20 percent of global oil supply passes daily — has been effectively closed to commercial shipping since March 2026. Iran deployed a combination of naval mines, fast-attack boats, and shore-based anti-ship missile batteries to deter tanker traffic, triggering the most serious disruption to Gulf energy exports in the modern era.

Tankers Seized, Insurance Suspended

At least four oil tankers have been damaged or seized since the conflict began, according to the United Kingdom Maritime Trade Operations authority. Lloyd's War Risk insurers suspended new coverage for vessels transiting without a military naval escort, effectively making unescorted commercial transit an uninsurable risk. Shipping companies that attempted to transit reported being shadowed or warned off by Iranian Revolutionary Guard Corps fast boats.

The closure has created immediate shortfalls for energy-importing economies across Asia. Japan, South Korea, and India — which collectively receive a large share of Gulf crude — scrambled to activate strategic petroleum reserves and accelerate sourcing from West Africa and the United States. European energy ministers held emergency sessions to coordinate gas storage top-ups before the summer demand peak.

Saudi Arabia and UAE Activate Bypass Routes

Saudi Arabia moved quickly to redirect crude through the East-West Pipeline, which runs from the Eastern Province to the Red Sea port of Yanbu. The pipeline has a capacity of approximately 5 million barrels per day — meaningful but short of Saudi Arabia's full export volume of around 6.5 million barrels per day, leaving a significant gap. Aramco has acknowledged that full export restoration will require either a reopening of the Strait or new pipeline capacity.

The UAE's Abu Dhabi Crude Oil Pipeline to the port of Fujairah on the Gulf of Oman has been running near maximum capacity since March. Oman, sitting entirely outside the Strait, has emerged as a critical regional hub. Gulf governments are in active talks about fast-tracking pipeline and port expansions at Sohar and Duqm to increase bypass capacity over the next 12 to 18 months.

Oil Prices and Global Economic Impact

Brent crude climbed past $105 per barrel in April 2026, its highest level since 2022, adding inflation pressure across energy-importing economies. Analysts at major investment banks have modeled scenarios ranging from a brief Strait reopening that cools prices quickly, to a prolonged closure that could push oil toward $130 per barrel by Q3.

GCC finance ministers met in Riyadh in early May to coordinate economic responses. A joint emergency fund was proposed to cushion member economies during the disruption. Qatar, whose LNG exports also transit the Strait, is assessing pipeline rerouting options through Oman and Bahrain. The crisis has accelerated long-term Gulf interest in bypass infrastructure — investments that were politically difficult to justify before February 2026.

Path to Reopening

Analysts at Carnegie Endowment and the International Crisis Group warn that even a partial, negotiated reopening of the Strait will require weeks of mine clearance and confidence-building measures. Any lasting solution depends on broader progress in the US-Iran diplomatic track. For Gulf businesses, planning for a prolonged closure is now the prudent assumption, with pipeline bypass routes serving as the primary operational lifeline until a durable settlement emerges.