Key points:
- Around 20% of the world’s oil and liquified natural gas (LNG) passes through the two mile-wide shipping lanes in the Strait of Hormuz, making it a major chokepoint in global energy supply.
- If the US attacks Iran, the Middle Eastern nation may disrupt or block the shipping route.
- Four Asian countries, China, India, Japan and South Korea, account for 75% of oil and 59% of LNG flows through the Strait. Of these, Japan and South Korea are the most vulnerable to supply shocks, sourcing 87% and 81% of their energy from fossil fuel imports.
- Zero Carbon Analytics finds that of the top countries that import oil and gas via the Strait of Hormuz, Japan faces the most direct risk of disruption, due to its high share of oil and gas trade through the shipping route and its reliance on imported oil and gas. South Korea ranks second most at risk, India third and China fourth.
- A blockade of the Strait of Hormuz could push oil prices up to USD 130 per barrel, matching the all-time high seen during the 2007-2008 oil shock. Iraq’s Deputy Prime Minister has warned prices could reach as much as USD 300 per barrel.
- Japan, as well as other oil and gas importing countries, can reduce their vulnerability to major supply shocks by investing in renewable generation and electrifying their economies.
- Europe has shown how quickly countries can reduce their reliance on fossil fuels, reducing gas imports by 18% between 2022 and 2024.
The Strait of Hormuz, a chokepoint for global oil and gas trade, is at risk of being blocked
The Strait of Hormuz lies between Iran and Oman on the Arabian Peninsula and connects the Persian Gulf with the Arabian Sea. The shipping lanes in the Strait are only two miles wide in each direction, but around 20% of the world’s oil and liquified natural gas (LNG) flow through them. The narrow chokepoint is the main route for oil exported from major Middle East producers, including Saudi Arabia, Iraq and Iran, and the only route for LNG from Qatar and the UAE to enter global markets.
Months after Israel and Iran traded rocket fire in 2025, US President Donald Trump has threatened to attack Iran over its nuclear programme, raising the prospect that the Middle Eastern country will attempt to block this vital shipping route.
Iran has stated its willingness to use this option in the past, and oil prices have already risen as traders price in the extra risk. The country partially closed the Strait for several hours in mid-February 2026 to conduct military exercises, and the government has reportedly said that closing the Strait would be “easier than drinking a glass of water“.
Combined with other recent US foreign policy moves, including capturing Venezuelan President Nicolas Maduro and threatening to seize control of Greenland, a strike on Iran could trigger a shock in the global energy system similar to that seen post Russia’s invasion of Ukraine, which was launched four years ago in 2022.
While some say a closure is unlikely, partly because doing so would cut off a vital source of Iran’s state revenues, it is worth considering the impact on global energy flows should this scenario come to pass.
Attacks by Iranian-backed Houthis in Yemen on shipping in the Red Sea have had an enormous impact, despite the small military force deployed – as of April 2025, attacks had led to a 70% reduction in ships arriving in the Gulf of Aden, which connects the Red Sea to the Arabian Sea, from 2023 levels. In October 2025, Houthi rebels claimed responsibility for an attack on a Dutch-flagged cargo ship in the area.
Asian countries face the most direct risk from disruption in the Strait of Hormuz
84% of oil and 83% of LNG shipped through the Strait of Hormuz in 2024 went to Asian markets, according to US Energy Information Administration (EIA) estimates. Just four Asian countries – China, India, Japan and South Korea – accounted for 75% of oil and 59% of LNG flows through the chokepoint.1Data extracted from EIA analysis based on Vortexa tanker tracking using Automeris.io, which produces estimated data based on published graphs.
While China and India are the largest single destinations for oil and LNG travelling through the Strait, Japan and South Korea are far more vulnerable to supply shocks. According to analysis by Ember, 87% of Japan’s and 81% of South Korea’s total energy usage comes from imported fossil fuels, compared to 20% for China and 35% for India.
Both Japan and South Korea are also heavily reliant on oil and gas, which account for 71% and 78% of their fossil fuel imports, respectively. Japan’s high reliance on fossil fuel imports has the potential to undermine its national security strategy, which seeks to “ensure the self-reliance of its economic structure.”
Taiwan is also heavily exposed as it is entirely reliant on imported gas and one-third of its LNG travels through the Strait, according to Anne-Sophie Corbeau of the Center on Global Energy Policy at Columbia University. She points out that, while it does produce some gas domestically, Pakistan is in a similar position.
New analysis shows that Japan faces the most direct risk
To determine which countries that import oil and gas through the Strait are at greatest risk of supply disruptions, we assessed the countries’ shares of oil and gas flows at risk and their reliance on these imports for energy. This produces a ‘risk score’ for each country, giving an indication of their relative vulnerability to a supply shock in the shipping route.2The risk score is calculated by multiplying a country’s percentage share of oil and LNG flows through the Strait of Hormuz by the percentage of its energy coming from fossil fuel imports, and the percentage of oil and gas in its fossil fuel imports. The countries assessed were Japan, South Korea, India, China and the US. Crude oil flows data for Q1 2025 extracted from from EIA analysis based on Vortexa tanker tracking using Automeris.io, which produces estimated data based on published graphs. LNG flows for 2023 from IEA. Share of energy from fossil fuel imports from Ember, April 2025. Oil and gas share of fossil fuel imports for 2023 from IEA. Risk score is a relative measure for comparison between countries, not an absolute metric. The analysis included the top five countries for which data is publicly available, China, India, Japan, South Korea and the US.
Of the five countries, Japan has the highest risk of supply disruption from conflict in the Strait, with a risk score of 6.4. South Korea and India face similar levels of vulnerability, with scores of 5.3 and 4.9, respectively. China, which produces its own gas and imports the rest via both pipelines and LNG terminals, has a slightly lower score at 4.4.
By contrast, the US faces very limited direct risk, largely due to its role as a net exporter of oil and gas and its comparatively low levels of imports through the Strait.
Disruption in the Strait of Hormuz will push up oil and gas prices globally
Ultimately, disruption in the Strait of Hormuz would seriously affect all oil and gas-importing countries, as it would lead to global oil and gas prices rising rapidly, likely to historic levels.
Prices have already risen, with crude up by around 19% in 2026 so far.3As of 25 February 2026, Brent crude was trading at USD 71.40 per barrel, up from USD 60.18 at the end of 2025. Price data accessed via Trading Economics on 25 February 2026. Oil prices averaged USD 67 per barrel in January 2026 – the highest since September 2025 – in part due to escalating tensions with Iran. However, prices for Asian LNG deliveries have been tempered by a surge in US exports and soft demand in China.
Should a major disruption in the Strait occur, crude oil prices will surge as major suppliers are cut off from the global market. But price forecasts vary substantially.
In 2025, Iraq’s Deputy Prime Minister and Foreign Minister Fuad Hussein reportedly said oil prices could reach USD 200-300 per barrel if the Strait is blocked. JPMorgan analysts said at the time that oil prices could reach USD 130 a barrel, while, more recently, financial services firm CME Group said it expects a smaller USD 13.5 per barrel gain from today’s levels.
At USD 130 per barrel, oil prices would match the all-time record high seen during the oil shock of 2007-2008, and exceed those seen following Russia’s invasion of Ukraine.4USD 130 per barrel is used as a mid-range assumption from JPMorganChase.
Regarding gas, a one-year closure of the Strait would result in a 15% decline in global LNG supply relative to 2024 levels, according to the Oxford Institute for Energy Studies, as the sharp fall in Middle Eastern supply can be only partly offset by new volumes from Australia, the US and Canada.
As a result of the lost capacity, LNG prices in Japan could surge by around 170%. The country has suffered from oil and gas price spikes in the past – the 2022 spike contributed to rising energy prices and rising inflation in Japan. Average household electricity bills jumped 25.8% and petrol prices hit USD 1.50 per litre. This led the government to announce a JPY 25 trillion package (USD 170 billion) to compensate users for higher electricity and gasoline prices. These compensation packages continued to cost into 2024, when the Japanese government allocated around JPY 989 billion (USD 6.8 billion) to reduce the prices of gasoline, electricity and gas bills.
The Dutch financial services group ING warns that a closure of the Strait would come at a bad time for the EU, with the bloc’s gas storage levels currently declining towards the 30% mark. The EU’s need to replenish its stocks in the months ahead will increase competition for LNG between it and Asia, potentially at the same time that supply falls sharply.
Renewables and electrification reduce supply risks and enhance energy security
This conflict highlights that oil and gas supply chains are inherently unreliable and vulnerable to geopolitical instability. Of all commodities, LNG is the most exposed to geopolitical shocks, with conflicts magnifying inherent volatility.
The elevated risk of price spikes could potentially push importing nations to electrify faster. Ramping up renewable energy deployment and pursuing electrification are strategic choices for oil and gas-importing countries to reduce their vulnerability.
This is particularly the case for price-sensitive South and Southeast Asian countries. For countries like Pakistan, who experienced an unprecedented solar boom in 2025, renewables such as solar offer a ‘cheaper, more reliable and more immediate solution’.5The World Resources Insitute reports that “Between 2019 and 2025, cumulative solar panel imports surpassed Pakistan’s total installed power plant capacity by 2 gigawatts (GW)”, led by small-scale installations.
In response to Russia’s invasion of Ukraine in 2022, European countries have used renewable energy and energy efficiency to reduce their imports and consumption of oil and gas. Europe cut its gas imports from 361.5 billion cubic metres (bcm) in 2021 to 313.5 bcm in 2025 – a drop of 48 bcm, or 13%. France reduced its gas consumption by 25% and Germany by 11% between April 2024 and March 2025, compared to a reference period of April 2017 to March 2022. Petroleum imports fell by 2.4% in 2024, compared to 2023.
Japan faces a fork in the road between electrification and increasing oil and gas imports
Past decisions have reinforced Japan’s reliance on imported fossil fuels. Following the 2011 Fukushima disaster, Japan shut down its nuclear reactors and increased the share of fossil fuels in its grid, which rose from 64.5% in 2010 to 68.8% in 2024. Germany also phased out nuclear power following the disaster, but increased the share of renewables in its energy mix, achieving a 58.8% share in 2024, up from 16.9% in 2010.
Studies have shown that Japan can achieve 100% renewable electricity in its power grid at competitive electricity prices.6Compared to 2020 prices. The government could repeat the choices it made during the 1970s oil crisis, when it backed alternative energy sources such as solar energy and electric vehicles. The 7th Strategic Energy Plan, released in February 2025, would see renewable energy grow from 23% in 2023 to up to 50% by 2040. However, it would still keep Japan dependent on imports of fossil fuels such as LNG and coal for 30-40% of electricity generation in 2040.
Renewables would have multiple benefits that could enable Japan to achieve its energy policy goals of energy security, economic growth and reducing emissions. Using more domestic renewable energy would allow Japan to reduce dependence on fossil fuel imports and redirect that expenditure – estimated by BNEF to be USD 1.8 trillion between 2010-22, more than 3% of GDP – towards domestic economic opportunities.
The cost of installing renewable energy is falling. Installing renewables would better shield the country from fossil fuel price volatility and could lead to lower power prices. The levelised cost of electricity (LCOE) for utility-scale solar in Japan fell by over 80% between 2014 and 2023 to JPY 9.9 per kWh – significantly cheaper than that of LNG-fired generation (JPY 22.3 per kWh in 2023). Installing 140 GW of wind power capacity by 2050 could create an estimated 355,000 jobs.
There is also scope to cut oil imports by accelerating the uptake of EVs. The IEA projects that EVs will displace around 5 million barrels of oil per day around the world by 2030. The Japanese government has set a target for all vehicles to be battery electric, fuel-cell, plug-in hybrid or hybrid by 2035, and has increased subsidies to make this happen.
This briefing was originally published in June 2025. It was updated in February 2026.
