The war in Iran has effectively shut down the Strait of Hormuz - one of the most important maritime chokepoints on the planet - triggering what energy historian Daniel Yergin called the "biggest disruption in oil production in history" combined with a "resounding shock to global gas markets."
As "Hvylya" reports, citing an analysis by Yergin in the Financial Times, on any given day as many as 90 tankers could usually be seen sailing through the strait. Now there are virtually none. About 20 per cent of the world's oil and nearly 20 per cent of global liquefied natural gas normally travel through this narrow passage.
While insurance policies for shipping in the region remain active, very large war-risk premiums are being added. Several commercial vessels in the Gulf or just outside the strait have already been targeted with drones, and the threat of attack by weaponised Iranian speedboats remains a constant factor.
Yergin warned that the most dangerous scenario would be severe damage to infrastructure and a lengthy closure of the strait, which would fuel fears of longer-term supply shortfalls. Since Tehran launched the conflict a week ago, it has "done everything it can" to turn the nightmare scenario into reality.
Still, the crisis unfolds in a world where the global oil and gas system is more resilient and diversified than it has been for decades - from US shale production to Saudi pipeline networks bypassing the strait. But all of that resilience has its limits. As Yergin put it, "the key question for global energy markets now is the duration of this explosive war."
Also read: Qatar Warns of Global Energy Collapse and $150 Oil if Iran Conflict Persists