Kathmandu. A route for the world’s energy supply carries about 21 million barrels of oil every day. If there is a crisis on this route, its impact will not only be limited to the price of petrol and diesel but also to economies and industries around the world. The Hormuz Strait crisis of 2026 has exposed this danger in a broader sense.
According to the McKinsey Global Institute (MGI), about 14% of the world’s oil and gas supply was affected at the height of the crisis. The impact was more than twice as severe as the major oil shocks of the 1970s and nearly six times more severe than the Russia-Ukraine conflict of 2022.
Why TAG_OPEN_strong_31 is Hormuz so important?
The importance of Hormuz can be gauged from the fact that about 21 million barrels of oil passed through this route every day in the fourth quarter of 2025. This included about 16 million barrels of crude oil and 5 million barrels of refined petroleum products. This means that it is not only a maritime route but also a major link in the world’s energy trade.
Any major disruption there could put pressure on oil, gas, petroleum products, and related trade at the same time. Still, the global market did not collapse completely during the crisis. The market was able to absorb some of the supply shocks through reduced consumption, alternative routes, existing reserves, and altered trade flows.
Major scarcity management by reducing consumption
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According to the estimates of the McKinsey Global Institute, about 45% of the oil supply lost during the crisis was managed through reduced consumption. This was equivalent to about 68 million barrels per day. China reduced its oil imports. While the US increased its exports. This changed the flow of oil supplies to different parts of the world and gave some relief to the market. However, this whole incident made another important point clear: the buffer of the energy market is not unlimited.
Limitations on inventory and alternate route{
During the supply crisis, prices soared, oil stockpiles dwindled, and refinery systems faced increasing pressure. Alternative infrastructure provided some relief. However, it could not easily meet the entire shortage. The disruption of Saudi Arabia’s East-West pipeline is a prime example of this.
This pipeline is one of the key options for bypassing Hormuz. However, its blockage has exposed that even alternative routes are not completely risk-free. Simply installing pipelines or other transportation routes is not a guarantee of energy security. In times of crisis, its capacity, location, and connection to other infrastructure are equally important.
Many of the world’s major chokepoints are at risk{
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According to MGI, about two-thirds of the global energy trade passes through maritime chokepoints. Therefore, a crisis on a major sea route can affect many parts of the world at once. About 23 million barrels of oil and refined products pass through the sea of Malacca every day. Hormuz is also important. It carries about 21 million barrels of water every day.
In addition, the Cape of Good Hope, the Suez Canal, the Turkish Sea Route, the Bab-el-Mandeb and the Panama Canal are also important routes for global energy trade. Recent tensions in the Red Sea and Yemen have also shown that when the danger to the sea increases and ships may have to take longer routes. This increases both travel time and transportation costs. -Agency
