Goldman Sachs has issued a stark warning about the rising risk of real oil shortages as the closure of the Strait of Hormuz, a critical global oil transit chokepoint, begins to deplete global supply buffers. The strait, which normally sees about 138 vessels carrying 20 million barrels of oil daily (roughly 20% of global seaborne supply), has seen traffic drop by over 90% to single-digit daily crossings following a US-Israeli military campaign against Iran.
The investment bank's strategist, Daan Struyven, noted that the last tankers to cross before the conflict began are now reaching their destinations, meaning the pre-conflict supply cushion is running out. Asian oil imports have already fallen by a net 9 million barrels per day by the end of March, with the full supply drop taking time to materialize due to long tanker voyage times.
The impact is being felt acutely on the ground and in prices. Refined product prices, particularly for diesel, have surged by up to 150% as wealthier nations compete for supplies. The Philippines has declared a national fuel emergency, South Korea has restricted public-sector vehicle use, and Australia is experiencing fuel stations running dry.
Markets reacted violently to escalating rhetoric from former President Donald Trump. After a brief dip below $100 per barrel in late March on ceasefire hopes, West Texas Intermediate (WTI) crude surged 11.4% to $111.54 per barrel on April 2 following Trump's pledge to hit Iran "extremely hard" over the next two to three weeks. Brent crude reached $109.03 per barrel.
With a Tuesday-night deadline set by Trump for Iran to agree to terms and reopen the strait, tensions are at a peak. U.S. officials have signaled possible strikes on Iranian infrastructure, including bridges and power plants, as negotiators report being "pessimistic" that Iran will meet the demand. Analysts like Ben Emons of Fed Watch Advisors emphasize that the flow of oil through the strait matters more to markets than production capacity, suggesting a reopening could act as a form of stimulus for global markets.
