After the de facto closure of the Strait of Hormuz, we have received information that the Strait is much more than just an oil and LNG (liquefied natural gas) narrows. Thirty-one percent of global maritime trade flows through the Strait. To note, yesterday the traffic through the Strait had fallen by 90% with, reportedly, only Chinese and Russian tankers allowed passage. This is essentially the scenario on which we warned in the Weekly Forecasts 7/2026.
It was recently reported that Total Energies, ConocoPhillips, and Exxon are evacuating people from Qatar and likely from the UAE and KSA (Saudi Arabia). There is a risk of around 30% of oil and some 20% of LNG production going offline, if the war continues. It goes without saying that it would produce an epic energy shock and that it would take a long time to bring production back online.
On Tuesday, it was noted that marine insurers are cancelling war risk coverage. Maersk and COSCO, the shipping giants, have reportedly seized their operations in the Gulf. The White House tried to step in by providing it own “insurance coverage” and escort support. Iran controls the Strait, and like we have noted previously, the means it holds to control the Strait are relatively overwhelming. We are very skeptical that the U.S. Navy has the “muscles” to free the Strait.
The repercussions of any prolonged closure of the Strait of Hormuz would be catastrophic for global supply chains. This is why we issue a warning of a global systemic collapse, if the war and blockade prolong, which currently looks likely. Here are some of the details.
