Hormuz closure: Why crude oil prices haven’t spiralled out of control
Despite a significant supply shock caused by the closure of the Strait of Hormuz, global crude oil prices have remained more stable than in previous historical crises. Analysts attribute this resilience to a more diversified global market, including increased production from non-OPEC nations like the US and Brazil.
Why it matters
Understanding the structural changes in the oil market helps explain why global economies are currently more resilient to Middle Eastern supply disruptions.
The Middle East conflict and the closure of Strait of Hormuz led to the biggest oil supply shock and disruption in recent times. Global oil supply fell by 13.6 million barrels per day, which is around 13% of the 2025 global output according to the latest report by Asian Development Bank. In fact, the losses exceeded every previous oil crisis. By comparison, the 1973 Arab oil embargo and the 1990 Gulf War removed 4–6 million barrels per day at their peaks, and the initial loss following the Russian invasion of Ukraine in 2022 was about 1 million barrels per day.Yet as ADB notes in its report - despite this unprecedented supply shock, crude oil prices did not reach levels seen during the 1973 Arab oil embargo or even the 1990 Gulf war, if one were to inflation-adjust the prices.
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in