The report indicates that the continued closure of the Strait of Hormuz (SoH), which handles the flow of about 20 million barrels of oil per day, could significantly tighten global supply and push oil prices to the $110-150 per barrel range in four to eight weeks.
It added that the chaos had already slowed maritime traffic in the region to a near standstill and strained the global crude oil balance. The market was initially priced in about two weeks of confusion, but expectations are now moving toward a longer close.
According to the report, if the shutdown continues for a long time, especially up to eight weeks, the price of oil will reach around $150 per barrel. However, it noted that such high price levels would likely create demand distortions and encourage alternative supply responses in the market.
The report added that the release of strategic oil reserves may provide short-term relief but may also trigger demand for future restocking. It noted that the release of around 300-400 million barrels will ease supply pressure in the near term.
Meanwhile, restrictions on exports from West Asia could force a shutdown of around 6-7 mbpd, equivalent to more than 200 million barrels in March, which would keep the global crude market tight.
The report indicates that Asian economies are expected to be the most affected by the disruption. About 13 mbpd of oil passes through the Strait of Hormuz to countries like China, India, Japan and South Korea. While some countries may rely on their strategic reserves to weather supply shocks, those with limited reserves may be forced to cut back on oil production.
The report also discussed the potential impact on global gas markets. It noted that Qatar’s LNG production will resume within two weeks after the opening of the Strait of Hormuz, as the facilities are not yet damaged.
The report added that India is highly vulnerable to disturbances in the Strait of Hormuz. While crude supplies may remain manageable in the short term, higher LNG prices could reduce imports.
Among petroleum products, LPG is expected to be the most vulnerable in the event of prolonged disruptions in the region, the report added.
