The closure of the Strait of Hormuz is hitting Asian countries particularly hard. This crucial passage for oil, oil products and LNG from the Persian Gulf is normally one of the busiest energy routes in the world. Now that Iran has closed the strait, with only a few Indian tankers granted passage, the pressure is shifting directly to buyers in Asia.
China, India, Japan, South Korea, Taiwan, Bangladesh and Singapore in particular are feeling the impact of this disruption in energy flows.
According to figures from the International Energy Agency, around 80 percent of all crude oil and oil products from the Persian Gulf were shipped to Asia last year. For LNG, that share was as high as 90 percent. Europe, by comparison, is a much smaller buyer. This clearly shows why the closure of this route is felt primarily as an economic shock in Asia, while Europe is mainly affected indirectly through higher prices, volatility in the energy market and disruptions to global trade.
Strait of Hormuz closure puts pressure on oil flows
On average, around 15 million barrels of crude oil passed through the Strait of Hormuz each day last year. Saudi Arabia was the largest exporter, with nearly six million barrels per day, followed by Iraq, the United Arab Emirates, Iran, Kuwait and Qatar. Once this route closes, the impact is far from minor. It is not just regional and certainly not temporary. A significant share of the global energy supply comes under immediate pressure.
For Asia, the figures are particularly striking. China and India alone account for 44 percent of crude oil imports from the Persian Gulf, highlighting a strong dependence on this region. For Europe, the situation is very different. Only 4 percent of this crude is destined for Europe. This contrast clearly shows where the greatest impact is felt — not primarily in Rotterdam or Hamburg, but in Asian markets, where production, refining, industry and transport depend heavily on these supplies.
Strait of Hormuz closure also affects trade in oil products and lng
The closure is not limited to crude oil. Large volumes of oil products are also exported from the oil-producing countries on the Persian Gulf, such as naphtha, paraffin, diesel and fuel oil. Last year, this involved an average of five million barrels per day via this route. Again, this flow is mainly directed towards Asian countries. This means that not only oil prices are under pressure, but also the availability of refined products crucial for industry, transport and power generation.
In addition, lng plays a leading role. About a fifth of all liquefied natural gas worldwide comes from the Persian Gulf region. In this, Qatar is by far the most important exporter. Again, Asia is the dominant buyer. China tops the list, followed by India and other Asian markets. Europe receives only 10% of this lng, with Italy being the largest European buyer. So the flow of energy is very clearly eastbound.
For logistics players, this development is relevant even if they do not directly transport oil or gas. Indeed, higher energy prices affect almost the entire chain. Fuel surcharges, rising production costs, pressure on transport capacity and fluctuating demand can quickly reinforce each other. A regional blockage then grows into a global cost increase. On top of that, uncertainty in energy markets often directly affects sea freight, inland shipping, road transport and air freight.
For European companies, the physical dependence is smaller than in Asia, but the financial impact can still be substantial. This is especially true for importers, exporters and shippers who have to deal with fluctuating bunker prices, rising surcharges and nervous market reactions. Those interested in learning more about broader developments in international supply chains can also visit TOP's news page. Background on energy flows and market effects can additionally be found through the International Energy Agency.
Did you know.
Only 10% of all lng exports from the Persian Gulf go to Europe. For Asia, that share is 90%. That makes it immediately clear where the biggest dependence is.
The gist of the story is clear. The closure of the Strait of Hormuz is primarily a problem for Asia. That is where the largest buyers of crude oil, oil products and lng from the Persian Gulf are located. Europe is not unaffected, but is rather on the sidelines of physical deliveries and mainly gets the economic aftershocks. As long as the route remains closed, tension hangs over the energy market and hence global trade.
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