Insight
The Middle East Conflict: at what price does the oil market rebalance?
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Report summary
A prolonged closure of the Strait of Hormuz (SoH) would remove ~10 million b/d of crude and condensate supply from global markets. Unlike 2020's demand-driven shock, this is a supply-side crisis requiring sustained high oil prices to achieve market equilibrium. This Insight covers: • structural supply loss, as the 12 - 14 million b/d transiting through the SoH is partially offset by pipeline routes • the economic impact of sustained higher oil prices • the countries with the greatest vulnerability to the loss of SoH volumes • global oil demand decline from the impact of GDP drop and higher prices • the sustained Brent price required to drive demand down sufficiently to rebalance the market
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