Crude oil prices dropped more than 3% on January 15 after US President Donald Trump signaled a softer stance on Iran, following assurances regarding the killing of Iranian protesters. The sharp price reactions to US-Iran tensions are largely due to the Strait of Hormuz, a narrow but strategically vital waterway between Oman and Iran.

According to the US Energy Information Administration, about 20 million barrels of oil pass through the strait daily, representing roughly one-fifth of global oil consumption. Nearly 20% of the world’s liquefied natural gas trade also transits this route. Of the 20 million barrels, only 2.6 million barrels per day can be transported via existing pipelines, leaving around 87% entirely dependent on the strait.

WHO DEPENDS ON HORMUZ?

Approximately 84% of the crude oil and condensate moving through the strait is destined for Asian markets. China, India, Japan, and South Korea alone account for 69% of this flow, while non-Asian markets make up just 16%.

THE HORMUZ EFFECT

The strait’s strategic importance often causes oil prices to spike during geopolitical tensions. On June 12–13, 2025, Israel’s attack on Iran pushed Brent crude from $69 to $74 per barrel — a 7% jump in a single day — even though flows were uninterrupted. Ten days later, a US strike on Iran’s nuclear facilities, followed by Iran’s warning to deploy naval mines, pushed Brent crude to around $81 per barrel.

This volatility highlights how heavily global oil markets depend on the Strait of Hormuz and the region’s geopolitical stability.