The Strait of Hormuz disruption has removed nearly 13 million barrels per day of Gulf supply while tightening global fuel markets and increasing volatility, the Oxford Institute for Energy Studies said in a Friday note.
According to the institute, the disruption quickly evolved from a shipping interruption into a broader production shock as crude and refined product flows through Hormuz nearly stopped.
"The SOH disruption is first and foremost a flow shock of unprecedent magnitude," the institute said, adding that the crisis exposed the strait's critical role for both crude and refined fuel exports.
OIES said the outage has also become a refinery and products crisis, as Gulf Cooperation Council refinery runs dropped sharply, while Asian refiners reduced throughput due to crude shortages and higher feedstock costs.
OIES said global oil market buffers remain limited because spare production capacity sits largely within the same disrupted Gulf region, while commercial inventories and strategic reserves continue drawing down rapidly.
US export growth, sanctioned crude waivers and oil-on-water offered temporary relief, but they cannot replace missing Gulf crude and fuel supplies if disruptions persist.
Despite strategic petroleum reserve releases, OECD crude inventories and US gasoline and distillate stocks have continued falling, while China remains relatively better protected through larger crude reserves and storage capacity despite weaker Middle East imports.
The physical supply disruption has also spread into financial markets, where oil price volatility reached record levels and liquidity conditions weakened sharply across major futures contracts, especially Gulf benchmarks.
Despite limited direct exposure to Hormuz crude flows and rising exports to Asia, the US still faces higher gasoline and diesel prices from global oil market pressures, while shale output growth remains muted.
Higher prices, fuel rationing and supply shortages are already pressuring oil demand, while inventory rebuilding after flows resume could later support consumption, OIES said.
A quicker recovery, weaker economic activity or deeper demand losses could pressure oil prices lower, while supply disruptions, infrastructure damage and geopolitical risks may keep volatility and prices elevated, OIES said.
Depleted inventories, tighter supply conditions and a more fragmented geopolitical environment could weaken the oil market's long-term resilience while keeping upside price risks elevated for longer.