The closure of the Strait of Hormuz as a result of the war in the Middle East has triggered a global oil supply crisis that extends far beyond the current Brent and WTI prices. Approximately one-fifth of global oil production has been cut off from the world market, while Asian refineries, in particular, are under immediate pressure due to their heavy reliance on supplies from the Gulf. The critical risk factor is the acute shortage of readily available crude oil grades, which is why prices for Omani and Dubai oil are soaring to record highs, while similar grades from Norway, Algeria, and Kazakhstan are also becoming significantly more expensive.(ft: 18.03.26)
Brent and WTI mask the real bottleneck
Many market participants look first at Brent and WTI, but these benchmark prices only tell part of the story in the oil market. Brent primarily represents North Sea oil, while WTI represents crude oil from Texas and the Gulf of Mexico. Furthermore, oil is not a uniform product; it varies in density, sulfur content, and intended use, which is why individual grades are valued very differently depending on the region and the buyer.
This is precisely why the crisis appears smaller in the major indices than it actually is. Current Brent and WTI contracts primarily concern deliveries next month, while oil from strategic reserves could also be released onto the market. This time lag is dampening prices for now, even though the physical market is already suffering from massive shortages. Those who focus solely on Brent therefore fail to recognize the full extent of the supply crisis, which has long since unfolded for immediately available barrels.
Supply crisis in Asia: Oman and Dubai send out warning signals
The sharpest fluctuations are seen in those grades that are particularly similar to the blocked Gulf deliveries. Omani oil initially jumped to almost $154 per barrel and then even reached $173.24. This benchmark is thus higher than the infamous price surge of 2008. Crude oil from Norway, Algeria, and Kazakhstan is also rising sharply in price, as buyers are specifically seeking comparable qualities.
One analyst succinctly summarized the cause: “It’s pure physical scarcity driving up prices.” This is precisely what makes the situation so critical. It’s not just about uncertainty in the futures markets, but about a lack of cargo for refineries that urgently need raw materials. This supply crisis is taking shape early, particularly in Asia, because the region’s dependence on the Gulf is especially high, and replacement barrels aren’t arriving quickly enough.
Asia feels the shock first, but the West is not spared
China, India, Japan, and South Korea are among the most important buyers of the volumes that normally flow through the Strait of Hormuz. In total, Asia imports around 11.2 million barrels of crude oil and an additional 1.4 million barrels of refined products per day via this route. Therefore, the immediate shortage in the oil market is hitting this region first, while the first signs of weakening demand are already visible, as product prices rise and spot loads become increasingly unaffordable.
Added to this is the transportation factor, which further exacerbates the market divide. A shipment from the Gulf to Asia usually takes 10 to 15 days, but to Europe it takes around 25 to 30 days via the Suez Canal or even 35 to 45 days via the Cape of Good Hope. Therefore, the disruption is hitting Asia faster and harder, while the Atlantic region is currently still benefiting from existing inventories. If the strait remains closed, however, Brent and WTI prices will also fall significantly, because buffers will then diminish and the global shortage will be fully reflected in the major benchmark prices.