Tensions in the Persian Gulf Put Pressure on the Market

A halt to shipping through the Strait of Hormuz, combined with a resumption of fighting, could trigger a supply shortage. According to the International Energy Agency, 75% of the 400 million barrels drawn from strategic reserves and released onto the market last March have now been consumed. China, which drew heavily on its own strategic reserves in the second half of the year, cannot keep doing so indefinitely. Some analysts believe Iran may seek to block the strait until the US midterm elections — a renewed closure lasting several months could this time push prices to record highs.