The U.S. Energy Information Administration is warning that crude oil prices could rise by $20 a barrel if the Strait of Hormuz remains shut down through the end of June. The forecast, released this week, lays out one of the clearest scenarios yet for how a prolonged closure of the world's most important oil chokepoint would hit global markets.
The EIA's price projection
The agency's analysis assumes a complete blockade of the strait, through which roughly 20 million barrels of oil and liquefied natural gas pass every day. If that route stays blocked until June 30, the EIA says, benchmark crude prices could climb $20 per barrel above current levels. The projection does not specify a baseline price, but it underscores the sensitivity of global oil markets to any disruption in the narrow waterway between Iran and Oman.
The EIA's forecast is not a prediction that the strait will close. It is a scenario meant to help policymakers and traders understand the stakes. The agency regularly runs such stress tests on energy infrastructure, and this one arrives amid heightened tensions in the region.
Why the Strait of Hormuz matters
About a third of the world's seaborne oil moves through the Strait of Hormuz. That makes it a single point of failure for global supply chains. Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, and Qatar all rely on the channel to export crude and gas. Iran, which borders the strait, has threatened to disrupt traffic in the past, most recently during the 2019 attacks on Saudi oil facilities.
A prolonged closure would force tankers to find alternative routes, but few exist. The only other option is a pipeline network that can handle only a fraction of the volume. Most of that pipeline capacity runs through Saudi Arabia and the UAE, and even then, it would not be enough to replace the lost seaborne traffic.
Potential economic fallout
A $20 jump in crude prices would ripple through the global economy. Gasoline prices at the pump would rise, hitting consumers in the U.S., Europe, and Asia. Inflation could tick up, central banks might tighten policy further, and industries that depend on cheap energy—like shipping, aviation, and petrochemicals—would face higher costs.
The EIA's warning comes at a time when oil markets are already tight. OPEC+ production cuts have kept supply constrained, and inventories in major consuming nations are below their five-year average. A disruption of Hormuz would compound those shortages, potentially pushing prices even higher than the $20 figure if the closure lasts longer than June.
Diplomatic efforts to keep the strait open are intensifying. The U.S. Navy's Fifth Fleet, based in Bahrain, continues to patrol the waterway. European and Asian governments are pressing all sides to avoid escalation. But no one is betting on a quick resolution. The EIA's scenario is meant to prepare markets for the worst case, not to predict it.
The next key date is the end of June. If the strait reopens before then, the price spike the EIA describes would not materialize. If it stays shut, the world will find out exactly how much a $20-a-barrel shock costs.
