{"id":5021,"date":"2026-03-30T12:36:52","date_gmt":"2026-03-30T12:36:52","guid":{"rendered":"https:\/\/ft365.org\/index.php\/2026\/03\/30\/the-worlds-oil-tap-is-still-off-inside-the-strait-of-hormuz-crisis\/"},"modified":"2026-03-30T12:36:52","modified_gmt":"2026-03-30T12:36:52","slug":"the-worlds-oil-tap-is-still-off-inside-the-strait-of-hormuz-crisis","status":"publish","type":"post","link":"http:\/\/ft365.org\/index.php\/2026\/03\/30\/the-worlds-oil-tap-is-still-off-inside-the-strait-of-hormuz-crisis\/","title":{"rendered":"The World\u2019s Oil Tap Is Still Off: Inside the Strait of Hormuz Crisis"},"content":{"rendered":"
\n

The Strait of Hormuz is often called the world\u2019s jugular vein, and for good reason. Just 21 miles wide at its narrowest point, this strip of water between Oman and Iran usually carries 20% of the world\u2019s liquid energy every single day.<\/p>\n

Since the outbreak of the Iran war on February 28, that vein has been pinched shut. With tanker traffic down over 90%, we are witnessing the most significant energy supply disruption in modern history.<\/p>\n

You could say that the global oil markets are in\u2026 dire straits.<\/p>\n

Here\u2019s how the silent strait is rewriting the rules for oil and forex markets.<\/p>\n

What Happened?<\/h2>\n

On February 28<\/strong>, the United States and Israel launched coordinated airstrikes on Iran under Operation Epic Fury. The strikes killed Supreme Leader Ali Khamenei and targeted nuclear sites and military leadership.<\/p>\n

Iran\u2019s response was immediate: its Islamic Revolutionary Guard Corps (IRGC) warned vessels that no ships would be permitted to pass, then began striking tankers with drones to prove the point.<\/p>\n

The closure wasn\u2019t achieved with mines or a naval blockade. A handful of cheap drone strikes was enough to make shipping insurers pull their war-risk coverage \u2014 and without insurance, no captain sends a ship through.<\/strong> It was, in effect, an insurance-driven shutdown. Just 21 tankers transited the strait in the weeks following February 28, compared with more than 100 ships daily before the conflict.<\/p>\n

Iran has since installed a de facto \u201ctoll booth\u201d<\/strong> charging\u00a0some vessels up to $2 million<\/strong> for safe passage and demanding documentation on crew and ownership before approving any transit. Nearly 2,000 vessels<\/strong> are stranded on both sides of the strait, with 20,000 sailors<\/strong> trapped aboard.<\/p>\n

The $100 Floor: Why Oil Refuses to Drop<\/h2>\n

In the first week of the conflict, Brent crude spiked to just under $120 per barrel<\/strong>. It has since stabilized in the $100\u2013$113 range<\/strong> \u2014 roughly 40% above pre-war levels \u2014 and analysts see little reason for it to fall while the strait stays closed.<\/p>\n

The math is simple but brutal. About 20 million barrels of oil per day<\/strong> normally pass through the Strait. While some can be rerouted through pipelines in Saudi Arabia and the UAE, the IEA estimates that 16 million barrels per day<\/strong> remain completely trapped. One oil expert put the geopolitical risk premium at roughly $40 per barrel<\/strong> above what fundamentals alone would justify.<\/p>\n

This isn\u2019t only a crude oil story. The strait also handles 20% of global Liquefied Natural Gas (LNG)<\/strong> \u2014 the gas that heats homes and powers factories, shipped in specialized tankers. Qatar, one of the world\u2019s biggest LNG exporters, declared force majeure<\/em> on its contracts (a legal clause for \u201cunforeseeable circumstances prevent delivery\u201d), causing gas prices in Asia and Europe to roughly double.<\/p>\n

The result is a twin shock<\/strong>: expensive transport and expensive heat, hitting the global economy at the same time<\/em>.<\/p>\n

\n

Promoted: Capitalize on Oil Crisis Risks Without Risking Your Own Funds.<\/strong><\/p>\n

With the U.S.-Israel war on Iran heating up, market volatility can rise quickly. Why risk your personal capital during extreme volatility?<\/p>\n

Most proprietary firms terminate your evaluation account if you execute a trade during a major macroeconomic release, but FundedNext<\/strong> permits news trading across all models.<\/p>\n

Test your energy crisis thesis with up to $300,000 in simulated capital, and take advantage of their Free Trial to experience the platform risk-free.
Explore FundedNext and Start Your Free Trial!<\/strong>
<\/small><\/p>\n

Disclosure: We may earn a commission from our partners if you sign up through our links.<\/em><\/small><\/p>\n<\/blockquote>\n

The Forex Fallout: Winners and Losers<\/h2>\n

In forex markets, currencies are proxies for a nation\u2019s economic health. When the oil tap turns off, some act like lifeboats and others begin to sink.<\/p>\n

The US Dollar (USD): A double-win.<\/strong> In a typical crisis, traders buy dollars for safety. In this one, they\u2019re buying dollars because the U.S. is also a massive energy producer. Unlike the oil shocks of the 1970s, America now exports its own oil and gas, making the dollar a hedge against both war risk and rising energy costs.<\/p>\n

The Japanese Yen (JPY) and Euro (EUR): Caught in the squeeze.<\/strong> Japan imports nearly all of its energy, much of it through the now-closed strait. As the cost to buy oil (priced in USD) rises, Japan must sell yen to buy those expensive dollars, devaluing the currency further.<\/p>\n

USD\/JPY hit a 20-month high near the 160.00 level<\/strong> in March, even though the yen is traditionally a safe-haven currency. Japan\u2019s energy import bill overwhelmed its safe-haven status! Similarly, Europe\u2019s industrial base faces a stagflation trap, forcing the ECB to abandon its rate cut consideration.<\/p>\n

The Comdolls: Unexpected winners.<\/strong> The Canadian Dollar (CAD)<\/strong> and Norwegian Krone (NOK)<\/strong> \u2014 \u201ccommodity currencies\u201d tied to oil production outside the conflict zone \u2014 have strengthened against both the yen and the euro. When oil stays above $100 and the producers are safe from the fighting, their currencies follow the price higher.<\/p>\n

Oil Importer Currencies: Under pressure.<\/strong> Currencies like the Australian Dollar (AUD), Indian rupee (INR), and Korean won (KRW) face sustained selling pressure. Oil-importing economies must convert their local currency to dollars to pay for expensive energy, a structural drain that doesn\u2019t stop until the strait reopens.<\/p>\n

What Traders Should Watch Next<\/h2>\n

Demand destruction<\/strong>
If oil pushes toward $150, the world doesn\u2019t just pay more; it starts pulling back. Factories slow, travel cools, and output takes a hit. That\u2019s how tight supply stories can flip fast into demand collapse, dragging commodity currencies with them. No ceasefire needed. The reversal can come out of nowhere.<\/p>\n

The shadow fleet<\/strong>
Some tankers are still getting through, running dark with transponders off and routes quietly cleared by the IRGC. If more of this traffic shows up, it could ease some of the pressure on prices and take a bit of heat off energy importers. Not a solution, but enough to matter at the margins.<\/p>\n

Bab el-Mandeb: The second chokepoint<\/strong>
Bab el-Mandeb isn\u2019t getting as much attention as Hormuz, but it should be. This narrow passage between Yemen and the Horn of Africa handles a huge chunk of global trade. The Houthi movement has already shown it can disrupt Red Sea shipping, and it has made it clear that closing the strait is still on the table. Iran has also hinted that another chokepoint could come into play.<\/p>\n

If both routes get hit at the same time, we could be looking at a serious supply shock. Tankers would have to reroute around the Cape of Good Hope, adding weeks to delivery times and pushing costs sharply higher. That kind of setup could choke off Gulf exports to Europe and send oil ripping higher in a hurry.<\/p>\n

Central bank pivots<\/strong>
In a normal cycle, higher inflation means higher rates. But if this turns into a full-blown energy shock, central banks like the Federal Reserve and European Central Bank may have to sit tight instead of tightening further. That tradeoff between inflation and growth is where things get messy, and where FX volatility tends to stick around longer than people expect.<\/p>\n

The Bottom Line<\/h2>\n

Oil kicked things off, but now it\u2019s about where this goes next. Every day the strait stays closed, the risk premium baked into every barrel stays elevated. The moment a credible ceasefire shows up, this premium can disappear fast and likely trigger a sharp unwind.<\/p>\n

For forex traders, the chain reaction is straightforward: oil feeds into inflation, inflation shapes central bank decisions, those decisions drive interest rates, and rates move currencies. Right now, every part of that chain is under pressure.<\/p>\n

Keep an eye on USD\/JPY, EUR\/USD, and crosses tied to commodity currencies. Headlines around a ceasefire, tanker flows, and central bank signals are doing the heavy lifting.<\/p>\n

And whatever position you\u2019re running, keep it light. One headline can flip the entire setup in seconds.<\/p>\n

\n

Promoted: Master Your Execution During Macro Shocks<\/strong><\/p>\n

When crude oil prices swing with every headline, does your execution stay clinical or get emotional? TradeZella\u2019s trade replay tool<\/strong> lets you revisit your past trades tick-by-tick. See exactly where your entry slipped or why you hesitated, so you can dominate the next volatility spike with a data-driven playbook.<\/p>\n

Start Your Journal with Tradezella and use code \u201cPIPS20\u201d to save 20% on your first purchase!<\/strong>
Disclosure: To help support our free daily content, we may earn a commission from our partners if you sign up through our links, at no extra cost to you.<\/em><\/small><\/p>\n<\/blockquote><\/div>\n","protected":false},"excerpt":{"rendered":"

The Strait of Hormuz is often called the world\u2019s jugular vein, and for good reason. Just 21 miles wide at its narrowest point, this strip of water between Oman and Iran usually carries 20% of the world\u2019s liquid energy every single day. Since the outbreak of the Iran war on February 28, that vein has<\/p>\n","protected":false},"author":2,"featured_media":5022,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-5021","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-news"],"featured_image_urls":{"full":["http:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/5021-strait-of-hormuz-crisis-780x406.png",780,406,false],"thumbnail":["http:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/5021-strait-of-hormuz-crisis-780x406-150x150.png",150,150,true],"medium":["http:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/5021-strait-of-hormuz-crisis-780x406-300x156.png",300,156,true],"medium_large":["http:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/5021-strait-of-hormuz-crisis-780x406-768x400.png",640,333,true],"large":["http:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/5021-strait-of-hormuz-crisis-780x406.png",640,333,false],"1536x1536":["http:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/5021-strait-of-hormuz-crisis-780x406.png",780,406,false],"2048x2048":["http:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/5021-strait-of-hormuz-crisis-780x406.png",780,406,false],"morenews-featured":["http:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/5021-strait-of-hormuz-crisis-780x406.png",780,406,false],"morenews-large":["http:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/5021-strait-of-hormuz-crisis-780x406.png",780,406,false],"morenews-medium":["http:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/5021-strait-of-hormuz-crisis-780x406-590x406.png",590,406,true],"crawlomatic_preview_image":["http:\/\/ft365.org\/wp-content\/uploads\/2026\/03\/5021-strait-of-hormuz-crisis-780x406-260x135.png",260,135,true]},"author_info":{"display_name":"henry","author_link":"http:\/\/ft365.org\/index.php\/author\/henry\/"},"category_info":"Latest News<\/a>","tag_info":"Latest News","comment_count":"0","_links":{"self":[{"href":"http:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/posts\/5021","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/comments?post=5021"}],"version-history":[{"count":0,"href":"http:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/posts\/5021\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/media\/5022"}],"wp:attachment":[{"href":"http:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/media?parent=5021"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/categories?post=5021"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/tags?post=5021"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}