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The 8 April ceasefire announcement and parallel discussions around a 45-day truce have not resolved the Strait of Hormuz disruption. They have, for now, capped the worst-case scenario, but tanker traffic remains at a fraction of normal levels and Iran's demand for transit fees signals a structural shift, not a temporary one.
What began as a regional conflict has become a global energy shock, and the question for markets is no longer whether Hormuz was disrupted, but how permanently the disruption changes the pricing floor for oil.
Key takeaways
- Around 20 million barrels per day (bpd) of oil and petroleum products normally pass through the Strait of Hormuz between Iran and Oman, equal to about one-fifth of global oil consumption and roughly 30% of global seaborne oil trade.
- This is a flow shock, not an inventory problem. Oil markets depend on continuous throughput, not static storage.
- If the disruption persists beyond a few weeks, Brent could shift from a short-term spike to a broader price shock, with stagflation risk.
- Tanker traffic through the strait fell from around 135 ships per day to fewer than 15 at the peak of disruption, a reduction of approximately 85%, with more than 150 vessels anchored, diverted, or delayed.
- A two-week ceasefire was announced on 8 April, with 45-day truce negotiations under way. Iran has separately signalled a demand for transit fees on vessels using the strait, which, if formalised, would represent a permanent geopolitical floor on energy costs.
- Markets have begun rotating away from growth and technology exposure toward energy and defence names, reflecting a view that elevated oil is becoming a structural cost rather than a temporary risk premium.
The world’s most critical oil chokepoint
The Strait of Hormuz handles roughly 20 million barrels per day of oil and petroleum products, equal to about 20% of global oil consumption and around 30% of global seaborne oil trade. With global oil demand near 104 million bpd and spare capacity limited, the market was already tightly balanced before the latest escalation.
The strait is also a critical corridor for liquefied natural gas. Around 290 million cubic metres of LNG transited the route each day on average in 2024, representing roughly 20% of global LNG trade, with Asian markets the main destination.
The International Energy Agency (IEA) has described Hormuz as the world’s most important oil transit chokepoint, noting that even partial interruptions may trigger outsized price moves. Brent crude has moved above US$100 a barrel, reflecting both physical tightness and a rising geopolitical risk premium.
Tankers idle as flows slow
Shipping and insurance data now point to strain in real time. More than 85 large crude carriers are reported to be stranded in the Persian Gulf, while more than 150 vessels have been anchored, diverted or delayed as operators reassess safety and insurance cover. That would leave an estimated 120 million to 150 million barrels of crude sitting idle at sea.
Those volumes represent only six to seven days of normal Hormuz throughput, or a little more than one day of global oil consumption.
Updated shipping and insurance data now confirm more than 150 vessels have been anchored, diverted, or delayed, up from the 85 initially reported. The 1.3 days of global consumption coverage from idle crude remains the binding constraint: this is a flow shock, not a storage problem, and the ceasefire has not yet translated into meaningfully restored throughput.
A market built on flow, not storage
Oil markets function on continuous movement. Refineries, petrochemical plants and global supply chains are calibrated to steady deliveries along predictable sea lanes. When flows through a chokepoint that carries roughly one-fifth of global oil consumption and around 30% of global seaborne oil trade are interrupted, the system can move from equilibrium to deficit within days.
Spare production capacity, largely concentrated within OPEC, is estimated at only 3 million to 5 million bpd. That falls well short of the volumes at risk if Hormuz flows are severely disrupted.
Oil market analysis
How long do idle tankers last?
135M idle barrels — days of cover against each demand benchmark
vs. Strait of Hormuz daily flow (20M bbl/day)
vs. Global oil consumption (104M bbl/day)
vs. US Strategic Petroleum Reserve release (1M bbl/day)
135M
idle barrels on tankers (midpoint of 120–150M range)
~33%
of daily Hormuz flow that is idle storage, not transit
<31 hrs
is all idle storage against global daily consumption
Inflation risks and macro spillovers
The inflationary impact of an oil shock typically arrives in waves. Higher fuel and energy prices may lift headline inflation quickly as petrol, diesel and power costs move higher.
Over time, higher energy costs may pass through freight, food, manufacturing and services. If the disruption persists, the combination of elevated inflation and slower growth could raise the risk of a stagflationary environment and leave central banks facing a difficult trade-off.
No easy offset, a system with little slack
What makes the current episode particularly acute is the lack of slack in the global system.
Global supply and demand near 103 million to 104 million bpd leave little spare cushion when a chokepoint handling nearly 20 million bpd, or about one-fifth of global oil consumption, is compromised. Estimated spare capacity of 3 million to 5 million bpd, mostly within OPEC, would cover only a fraction of the volumes at risk.
Alternative routes, including pipelines that bypass Hormuz and rerouted shipping, can only partly offset lost flows, and usually at higher cost and with longer lead times.
Bottom line
Until transit through the Strait of Hormuz is restored and seen as credibly secure, global oil flows are likely to remain impaired and risk premia elevated. For investors, policymakers and corporate decision-makers, the core question is whether oil can move where it needs to go, every day, without interruption.
After surging close to 4% since early July off the back of a weakening USD, the EURUSD pair has stabilised around $1.123. With very little volatility seen this week in the pair, eyes now turn to the euro, as the European inflation data is set to be released today. Analysts are predicting a continued downward trend in inflation, with a Year-on-Year forecast of 5.50%, which is below May’s figure of 6.1%.
If the inflation data comes in above forecasts, we may see a further increase in the EUR as investors move towards the potentially higher yields. On the technical front, the tightening of Bollinger Bands on the 4-hour chart is something to watch. The lack of movement in the EURUSD pair throughout this week has led to exceptionally tight Bollinger Bands, with levels not observed on this timeframe since 2021.
When Bollinger Bands contract significantly, it typically signifies a period of low volatility and suggests that a breakout or significant price movement may be on the horizon. The Relative Strength Index (RSI) is also in overbought territory on multiple timeframes, including the daily. This might suggest there is room for a cool-off before a further continuation higher.
However, with the European inflation data due today, the fundamental data might cancel out any technical signals.
After reaching the high of 1.1250, last tested in 2022, the EURUSD has been trading steadily lower and currently sits along the 1.0850 support level, formed by the 61.8% Fibonacci retracement level and the previous swing low from early July. Looking at the technical aspects, the Ichimoku cloud indicates continued bearish pressures, with the top of the channel providing dynamic resistance, highlighting further downside potential for the EURUSD. The current downtrend on the EURUSD has been driven by the European Central Bank’s (ECB) comments in July that there was no clear bias in favour of hiking or holding rates for the upcoming meeting in September.
Coupled with the increasing likelihood of another rate hike to come from the US FOMC in September, as the Fed continues to fight inflation, strength in the DXY has led to the EURUSD trading lower. While a brief retracement could be likely to retest the upper bound of the channel, look for the EURUSD to maintain within the bearish channel. If the price breaks below the support level of 1.0850, this could signal a confirmation of further downside, with the next key support level at the previous swing low, along the 1.0650 price level.
The EURUSD pair has been navigating challenging waters in recent weeks, experiencing a decline of more than 5% since mid-July. This decline has primarily been due to the USD's strength, as the Federal Reserve remains firm in its commitment to maintaining higher interest rates for longer to bring down inflation. Last week marked a critical turning point for EURUSD as it breached a crucial trend level.
The ascending channel that had been in place since early 2023 was broken, resulting in a swift price decline to around 1.07. Presently, the pair is sitting precariously on an important horizontal support level. The significance of this support level cannot be overstated.
Failure to hold at this level could lead to further downward movement, with the next support zone around the 1.05 mark. This impending test of support comes at a pivotal moment as the market eagerly await the release of the US Consumer Price Index (CPI) data later this week. The upcoming CPI data will be the main event for USD traders this week.
A decline in inflation could potentially soften the USD, suggesting that the Fed might consider an earlier-than-expected rate cut. On the other hand, if inflation exceeds analyst estimates, it may bolster the USD's strength, potentially causing the EURUSD pair to breach its current support level and head towards lower levels. As we approach the release of the CPI data, all eyes are on this key economic indicator.
Its outcome will undoubtedly serve as a pivotal driver of direction for the EURUSD pair this week.
EU and UK indices are looking to open slightly stronger despite a weak lead from the Asian session. Aussie and Asian indices finish in the red after US-China tech-related frictions and disappointing Japanese GDP revisions weighed on risk sentiment. Asian session wrap - FX Markets The USD was softer with DXY retreating from extreme RSI overbought levels to push below the key 105.00 level.
Dovish commentary from the Fed’s Logan ahead of the Fed blackout window and strength in the Dollars major counterparts outweighing the sour risk sentiment which would normally see the Dollar benefit from haven flows. EUR bounced back after a sell-off on Yesterday’s dismal German data. EURUSD pushing back above the 1.0700 level after finding support at the June lows.
USDJPY was choppy with early drop due to the risk-off mood and MoF jawboning saw the pair test the S/R level at 146.63 before bouncing back as the Asian session progressed. Japanese Finance Minister Suzuki stating in comments that rapid FX moves are undesirable and warned the Japanese MoF won't rule out any options (intervention?) AUDUSD rallied to test the key 0.6400 S/R level, despite the risk-off tone and recent commodity pressure. A weaker USD and some technical support from the daily trendline seeming to be the key drivers.
Looking ahead, the main risk events data wise will be Canadian jobs figures later today and Chinese CPI released on Saturday.
The DAX cooled off in yesterday’s session off the back of higher-than-expected German inflation data. With analysis expecting the Year-on-Year rate to fall to 6%, the actual number was higher at 6.2%. This has raised some concerns over the fight against inflation in Germany, putting an end to the three-day green streak for the DAX.
Technically, price bounced nicely off the support zone around 15,500-15,600. This level has acted as both a key area of resistance and support in the past 6 months. Since the first breakout above that zone in March, price has been ranging sideways ever since.
Multiple attempts to break and hold above the January 2022 high have failed, and the recent sell-off coincided nicely at the mid-range level. From a purely support and resistance technical view, there are two scenarios that could occur. The first would be a fall back down to the key support level around 15,600.
The second could be a positive catalyst news even that kicks price through the mid-range resistance level and back up towards the January 2022 high for a 4th attempt at breaking through. Since the recent low 2 weeks ago, the price action formed a more bullish market structure on the lower timeframes. We’ve seen a clean higher high and higher low.
While this bullish structure holds, bulls could remain in control.
In June, the Reserve Bank of Australia (RBA) surprised markets with a decision to hike rates by 25bps, taking the Australian cash rate to 4.10%. This was decided on the basis that further increases were required to provide greater confidence that inflation would return to the target range within a reasonable timeframe. This decision led to the AUDUSD climbing steadily from the 0.6650 price level up toward the 0.69 round number resistance area.
Currently, the AUDUSD is trading along the 0.6670 price level, just below the 23.60% Fibonacci retracement level, in the lead-up to the RBA decision on 4th July. While markets anticipate that the RBA could hold rates at 4.10%, given that the consumer price index (CPI) has fallen significantly from 6.8% to 5.6%, another surprise hike from the RBA could still be possible as inflation is still well above the target range. As the AUDUSD found relative support along the 0.6595 price level and with the Relative Strength Index (RSI) trending to the upside, a decision from the RBA to hike rates to 4.35% could lead the AUDUSD to climb steadily toward the immediate resistance level of 0.69.
Watch for the price to break above the 0.67 round number level, to signal a confirmation of the upside, with the 0.68 price level coinciding with the 61.8% Fibonacci retracement level providing brief resistance on the path up to the 0.69 resistance area.