Hormuz Strait Closure Sparks Global Energy Supply Concerns

Iran's Islamic Revolutionary Guard Corps Navy announced on July 12 that the Strait of Hormuz would be closed immediately due to an unsafe situation caused by illegal foreign interference, preventing any vessels from passing through. The U.S. military later said the southern shipping route of the Strait of Hormuz remained "open". The uncertainty surrounding one of the world's most important energy corridors has renewed concerns over global fuel supplies, with analysts warning of three immediate pressures on energy markets from both supply and demand sides.

Hormuz Disruption Tightens Crude Oil Supply

The renewed disruption to traffic through the Strait of Hormuz has intensified concerns over crude oil availability. Bloomberg, citing maritime monitoring data, reported that there was "almost no visible traffic" through the Strait of Hormuz on July 12, with only two oil tankers approaching the waterway.

Data from global shipping intelligence provider Kpler showed that vessel movements through the strait have continued to decline, falling from dozens of ships per day at the beginning of the month to single-digit levels in recent days, marking the lowest level in weeks and significantly below the more than 100 vessels that passed through daily before the Iran conflict.

The International Energy Agency (IEA) warned that a prolonged halt in shipping through the strait would significantly worsen the global crude supply outlook. IEA Executive Director Fatih Birol said on July 10 that oil supplies from the Gulf region had fallen to around 16 million barrels per day, down sharply from 24 million barrels per day before the Middle East conflict.

Vandana Hari, founder of energy analysis firm Vanda Insights, said that as shipping through the Strait of Hormuz remained disrupted, oil prices continued to face significant risk premiums.

The U.S. Central Command said on social media that at 5 p.m. Eastern Time on July 12, the U.S. military launched another round of strikes against Iran aimed at "continuing to weaken its ability to attack commercial vessels in the Strait of Hormuz." The strikes marked the fourth U.S. military operation against Iran within a week.

The ongoing U.S.-Iran military confrontation has fueled market concerns over crude supply security. International crude oil futures prices rose sharply when trading resumed for the new week on July 12, with gains exceeding 4% at one point.

Russian Fuel Export Restrictions Add Pressure To Diesel Markets

Meanwhile, the Russia-Ukraine conflict has emerged as another major pressure point for global refined fuel supplies. Several Russian refineries have been targeted in attacks, leading to a significant decline in domestic gasoline and diesel production.

According to Kpler data, Russia's average daily diesel and gasoline exports between July 1 and July 10 fell to 234,000 barrels, well below June's 400,000 barrels per day and 71% lower than the average level in 2025.

To address domestic fuel shortages, the Russian government announced on July 8 a ban on diesel exports, with the restriction scheduled to remain in effect until July 31.

As the world's second-largest diesel exporter, Russia's export restrictions are expected to further tighten global diesel supplies. Following the announcement, diesel prices in the European market reached record highs.

Abhishek Kumar, an oil market analyst at commodity firm Sparta Commodities, said the diesel export ban was introduced "almost at the worst possible time" as the Middle East conflict had already reduced crude inventories significantly.

The International Energy Agency said global refinery crude processing volumes in June were 6 million barrels lower than the same period last year, as Middle Eastern refineries had not fully resumed operations and Russian fuel production remained constrained by attacks.

Rising Energy Demand Intensifies Global Supply Risks

While energy supplies continue to face disruptions, global fuel demand is also rising.

Across Europe, record-breaking summer heatwaves have pushed electricity demand higher. Simone Tagliapietra, a senior fellow at economic and policy research institute Bruegel, said Europe's energy market was facing three simultaneous pressures: rapidly increasing cooling demand, declining efficiency of power plants and electricity grids, and reduced output from some coal-fired and nuclear power plants due to high cooling water temperatures or shortages.

In the United States, gasoline demand remains strong despite prices currently being around 30% higher than before the Middle East conflict. Higher airfares have encouraged more Americans to choose domestic travel this summer, with road trips expected to reach record levels.

Industry analysts warned that U.S. fuel demand this summer could reach 9.5 million barrels per day, exceeding the total daily capacity of U.S. fuel suppliers.

"The balance between supply and demand will definitely be extremely tight," said Sumeet Ritolia, an analyst at Kpler.

The International Energy Agency said in a report released on July 10 that global fuel inventories are being depleted faster than normal. If the trend continues and refinery capacity fails to recover or declines further, global gasoline markets could remain under sustained pressure throughout the summer.