As tensions rise in the Middle East, investors are already moving from headlines to mechanics: how the conflict could affect supply, shipping routes, and prices. The key question is whether this is a brief spike or the start of a more sustained supply shock.

Much of the discussion now centers on a practical set of questions about duration, supply, and market response. The answers may shape how investors assess the conflict’s implications for oil prices and the broader economic outlook in the weeks ahead. 

Here are a few the market is watching closely:

1. Out of roughly 100 million barrels of oil consumed globally each day, how much moves through the Strait of Hormuz? 

About 21 million barrels per day一roughly one in every five barrels of global supply一normally pass through the Strait of Hormuz, a flow that is now facing significant disruption. 

Daily Strait of Hormuz Vessel Traffic

March 15, 2025 - March 15, 2026

Source: TRHBTKCD Index, Bloomberg Finance L.P.

2. How does a potential 21 million barrel-per-day disruption compare to past oil supply shocks?

The 1990 Iraq-Kuwait crisis disrupted 4.3 million bpd at its peak, while the Russian supply loss during the early months of the Russia-Ukraine war was about 1 million bpd. This underscores how significant a major supply disruption this could be in historical terms.

3. How much Gulf crude can realistically bypass the Strait to make up the 21 million bpd disrupted? 

Saudi Arabia and the UAE can reroute only a fraction of Hormuz volumes: about 4.7 million bpd combined, versus the roughly 20.9 million bpd that normally transits the strait.

4. What about strategic reserves? Could they meaningfully offset lost supply?

Only partly. The International Energy Agency’s (IEA) 400 million-barrel release would equal about 19 days of a 20.9 million bpd disruption in theory, but real-world limits matter: The U.S. Strategic Petroleum Reserve’s (SPR) maximum nominal drawdown rate is 4.4 million bpd; oil can take about 13 days to begin reaching the market after a release order; and shipping logistics and delivery lags mean far less would arrive quickly enough to fully offset lost Gulf flows.

5. How long could disruption around the Strait of Hormuz last? 

We don’t know. But public forecasts suggest any serious Hormuz disruption would likely last weeks, not days: The U.S. Energy Information Administration (EIA) says Middle East production could remain shut in in the coming weeks and only gradually recover as transit resumes.

6. How high could oil prices spike? 

We don’t know that, either. But the EIA currently expects Brent crude to stay above $95 per barrel over the next two months, suggesting the market could see meaningful upside risk if disruption persists.

7. If this becomes a weeks-long supply shock, does it remain an oil story—or become a broader inflation-and-growth story?

If the shock lasts for weeks, it could stop being ‘just an oil story’ and become a broader inflation-and-growth story, as higher energy prices feed into costs across the economy, from fuel and freight to aviation, petrochemicals, and plastics.

8. How much could a sustained oil shock lift inflation and dent growth?

World Bank research suggests oil shocks can have measurable macro effects: A shock equivalent to oil prices rising 10% faster is associated with about 0.5 percentage points higher global inflation (0.5%), while a 10% oil-price increase has been associated with a 0.3% to 0.6% decline in U.S. real activity.

TAKEAWAY: Consider using the shock as a stress test. Revisit concentration risk, inflation sensitivity, interest-rate exposure, and whether sector weights still make sense if oil stays elevated for longer than expected. In that context, some of the most relevant portfolio questions are usually around energy exposure, duration risk, pricing power, and diversification—not whether to make a binary bet on oil itself.

“Each day that goes by with higher oil prices, we think more damage in the system is being done. It can correct, but it’s going to take some time.”

一 Timothy Reilly, President

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