As Iran continues to restrict the flow of marine traffic through the Strait of Hormuz, it is estimated that more than 11 million B/D of crude oil and condensate remains stranded within the Gulf Arab states.
The figure comes from Wood Mackenzie, which, in a new report, warned that under its worst-case scenario, the ongoing crisis may drive oil prices close to $200/bbl by the end of this year. The market research firm added that this historic benchmark might come even as global demand shrinks by 6 million B/D.
Earlier this month, Iran established the Persian Gulf Strait Authority (PGSA), requiring shipowners to apply for transit authorization through the Strait of Hormuz. While no official tariff has been published, multiple reports have said that some crude tankers have reportedly paid up to $2 million per transit to obtain clearance.
Calling the situation “the single greatest threat to global energy markets in decades,” Wood Mackenzie laid out two other scenarios in its report. Its “Quick Peace” scenario involves a settlement being struck between the US and Iran that would reopen the strait by June and put the global economy back to its pre-war track by the last quarter of the year.
The Brent crude benchmark would subsequently fall from its current levels of over $105/bbl to about $80/bbl before dropping to about $65/bbl in 2027 as the market becomes oversupplied once again. This optimistic scenario would still leave the Middle East in recession, while global gross domestic product (GDP) growth would fall from 3% in 2025 to about 2.3% in 2026.
If the situation remains deadlocked until September, then Wood Mackenzie is projecting a “shallow” global recession with GDP growth dropping below 2% this year due to major supply shortages of both crude and liquefied natural gas (LNG).
The impact on the global economy will be profoundly worse if the Strait of Hormuz remains closed through year-end and the ceasefire breaks down, allowing armed conflict to resume.
Wood Mackenzie says under this scenario, Brent crude may rise to almost $200/bbl, while diesel and jet fuel would soar toward $300/bbl. The result would be a global recession and could push the world’s oil- and gas-importing nations to become more aggressive in electrifying their economies to reduce their dependence on fossil fuels.
“The Strait of Hormuz is the most critical chokepoint in global energy markets, and a prolonged closure would become far more than an energy crisis,” Peter Martin, head of economics at Wood Mackenzie, said in a statement. “The longer disruption persists, the greater the impact on energy prices, industrial activity, trade flows, and global economic growth.”
A Lasting Impact on LNG
Wood Mackenzie said that regardless of how the current stalemate plays out, the region’s LNG market will continue to suffer. Even with a near-term settlement, Middle East LNG exports would remain tight until the middle of next year.
If negotiations between the US and Iran extend past this summer and the strait remains restricted, the analyst firm said some of the region’s 85 mtpa of LNG capacity may be “permanently lost.” Wood Mackenzie notes that there is also 75 mtpa of capacity under construction in the Middle East, but that it would likely face multiyear delays in being completed. This may result in a global LNG shortfall of 70 mtpa compared with pre-war projections.
If the Strait of Hormuz remains closed for the remainder of 2026, then Europe and Asia are expected to make significant efforts to reduce their reliance on hydrocarbons. Beneficiaries, however, would include US LNG exporters, which would see rising demand. Meanwhile, the global race to build out new critical mineral supply chains would ramp up as countries sought out alternative energy sources.
Enverus Intelligence Research also released a new report which highlights that Qatar, the leading LNG exporter in the Middle East, lost about 17% of its export capacity due to Iranian attacks on its LNG infrastructure. According to the firm, the result is an 8 Bcf/D drop in LNG supply, which is increasing competition for LNG cargoes between Europe and Asia.
Enverus predicts that some Asian countries may also turn to spare coal-fired power plant capacity, including India, Japan, and South Korea, to compensate for the loss of LNG supplies. The report also expects that Qatari LNG facilities will suffer a 2 Bcf/D shortfall until 2030 compared with pre-war export levels due to the extensive damage suffered during the conflict that began on 28 February.