The prospect of an expansion of hostilities in the Middle East has put in focus a potential oil supply shock if shipping through the Strait of Hormuz is significantly disrupted.
About $1.6 billion of oil passes through the strait every day, which is the gateway between oil-producing Gulf states and the rest of the world. Iran is on the eastern side, and Saudi Arabia, the United Arab Emirates, Oman and Yemen occupy the western side.
Should this key economic chokepoint be closed, that kind of disruption would send the price of oil toward $100 per barrel, or even above that.
Over the past five days as hostilities have escalated, the seven-day rolling average of tanker traffic—both west to east and east to west— has fallen by 14.7%, according to Bloomberg.
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Last year, traffic through the strait amounted to 20 million barrels per day, which is roughly 20% of global consumption, according to the U.S. Energy Information Administration. Traffic this year is roughly the same.
The EIA estimates that Asia was the destination for 84% of the oil and natural gas passing through the strait.
