Strait Closures and Russian Export Ban Strain Global Energy Supply

Ongoing conflicts in the Middle East and the Russia‑Ukraine war are tightening global energy supplies. Iran‑linked actions have disrupted traffic through the Strait of Hormuz, which carries about a quarter of the world’s oil shipments and nearly one‑fifth of LNG exports. Saudi crude has been rerouted to the Red Sea, while Houthi forces announced a maritime blockade of Saudi vessels on July 20. The Bab el‑Mandeb Strait, a key Red Sea gateway handling 12‑15% of global seaborne trade, is also under threat. Simultaneously, heightened fighting in the Black Sea has halted pipelines that move roughly a third of Russian oil, and Kazakhstan has stopped its crude flows there, pushing Russian oil processing to a multi‑decade low.

Amid these bottlenecks, major oil inventories are at historic lows, with U.S. crude stocks at their smallest since the Reagan era and OECD reserves dropping to 1990 levels. Prices for WTI and Brent hover around $90‑100 per barrel, well below their 2008 peaks, but markets remain fragile. In response, Russia’s deputy prime minister announced the extension of its gasoline export ban—originally set to end in July 2026—to the end of 2026, citing refinery attacks and the need to stabilise domestic fuel supplies. The combined supply constraints could raise freight costs, push up global inflation and weigh especially on Europe and Asia.