Several days ago, the Strait of Hormuz became an issue in the war with Iran. A very big issue. Hormuz is the single most important energy chokepoint in the world. The volume of trade moving through it is enormous, especially for oil and gas. About 20 million barrels a day moved through the Strait on average in 2024-2025. That's about 29% of global oil consumption. Global oil consumption is about 100-106 million barrels per day. So roughly one out of every five barrels used in the world, moved through that narrow passage. The strait also carries large amounts of liquefied natural gas or LNG. Around 20% of global LNG trade passes through Hormuz.
About 100 cargo vessels per day passes through the strait. 60 to 70% of them are oil and gas tankers. The countries of Saudi Arabia, Iraq, the Emirates, Iran, and Kuwait account for over 90% of the oil that flows through the strait. The shipments primarily supply Asia, not the United States. Asia received about 89% of the oil moving through Hormuz. China alone received about 38% of those exports.
Non-energy cargo accounts for about 30 to 40% of the traffic through Hormuz. Non-energy shipments include a wide range of goods moving between Gulf ports and the rest of the world. Major container ports in the Persian Gulf ship manufactured goods and imports through the strait, especially from the United Arab Emirates. Some examples of manufactured goods include electronics, machinery, automobile parts, consumer goods, and food imports. Large quantities of bulk commodities that move through the strait include aluminum, especially from the Emirates and Bahrain, steel products, cement, fertilizers, and petrochemicals. Gulf countries import a large share of their food through the strait, such as wheat, rice, livestock feed, frozen meat and poultry. The Persian Gulf hosts several naval bases, so the strait also sees many shipments of naval resupply ships, military transports and equipment shipments.
While energy dominates the strait's strategic importance, about a third of the shipping traffic is ordinary global trade, supplying Gulf economies and moving manufactured goods and raw materials. Based on the above information, very little energy imports to the US come through Hormuz. However, the supply for the global energy market is obviously affected. Most imported oil for the U.S. comes from Canada and Mexico. So if the U.S. supplies aren't at risk, why the rise in crude prices? Commodity traders are an easily spooked cabal, much like kindergartners. Any skirmish anywhere in the world can lead them to believe that energy supplies will be affected. It actually doesn't even require a conflict, the tone of a presidential press conference often is enough. Stable prices usually are soon to resume.
Spikes in oil prices are bad news for everyone. Seeing the price for any necessary commodity rise substantially in a short time is not only alarming but brings hardship situations for many. And not just for Americans. People in other countries, especially China, Russia and Cuba are feeling "the squeeze" and likely much more so than Americans. Their oil supplies do move through Hormuz. Their overall economies suffer, economic growth stalls when their energy supply chains are disrupted. For Russia, financing their ill-conceived war with Ukraine becomes much more difficult. China is the world's largest oil importer. About half their oil imports come from Persian Gulf producers. China is the hardest hit economy in the world with the closing of the Strait. All major sectors in China's export economy are substantially affected. China does have emergency reserves. About 90 to 100 days worth. If you think commodity traders in the U.S. are nervous, just imagine how the Chinese traders are feeling now...
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