#MacroFriday: The Strait of Hormuz

This week, instead of a chart, we include a simple map from the International Energy Agency (IEA) illustrating the Gulf’s oil exports that transit through the Strait of Hormuz. Considering last weekend’s sharp escalation in Iran and the wider Gulf region, we highlight the macro-economic importance of this narrow passage between Iran and Oman for global energy flows…and economic activity.

Since last weekend’s hostilities, the risk of a blockade of the Strait of Hormuz has moved financial markets. Oil prices have risen by around 18%, while Dutch TTF natural gas futures have surged by roughly 57%. On average, around 20 million barrels per day (mb/d) of crude oil and oil products transited the Strait of Hormuz in 2025, accounting for roughly 25% of global seaborne oil trade. Around 80% of these flows were destined for Asia. In addition, more than 110 billion cubic metres of LNG passed through the Strait in 2025, representing almost one-fifth of global LNG trade. Of the total energy volumes exported via the Strait of Hormuz, nearly 90% were destined for Asian markets, while just over 10% went to Europe.

Although most of these exports are destined for Asia, a prolonged conflict in the Middle East could push global energy prices higher and reignite inflationary pressures worldwide. The extent of the damage to global economic activity will largely depend on the duration of the conflict and the degree of uncertainty surrounding the security of the Strait of Hormuz. Lower energy prices have been a key driver of the recent decline in inflation toward central bank targets, even as services inflation has remained stubbornly elevated. A sustained increase in energy prices could therefore put renewed upward pressure on interest rates, as central banks would likely seek to contain the inflationary impact. The anology with the aorta is fitting:  a prolonged blockage of the Strait of Hormuz could act like a cardiovascular shock to the global economy.