Strait of Hormuz closure cuts 13% of global oil supply, spurring inflation and higher‑for‑longer rates

The Bank for International Settlements (BIS) warns that the de‑facto closure of the Strait of Hormuz, triggered by the Iran conflict in February 2026, has removed roughly 10 million barrels of crude per day – about 13 % of worldwide oil supply. Oil prices surged 67 % to a record $120 per barrel. In response, the International Energy Agency released 400 million barrels from strategic reserves, enough to offset only about 20 days of the shortfall.

BIS projects that the supply shock adds roughly 0.5 percentage points to global inflation and could force major central banks to keep policy rates elevated for an extended period – a “higher‑for‑longer” scenario. The impact extends beyond oil to fertilizers, petrochemicals and helium, with Asian markets hit hardest; more than 80 % of Hormuz‑shipped oil and gas previously headed to Asia, and around 70 % of Japan’s crude imports came via the strait.

Physical damage to over 40 energy facilities across nine regional countries and storage‑capacity shortfalls have led to production shut‑ins, suggesting the supply disruption may persist for years.