The Strait of Hormuz Has Been Shut for Almost Six Months. Oil Is at $93, Not $200, and That Gap Is the Story.

Four things closed that gap. Pipelines that bypass the strait, principally through Saudi Arabia and the Emirates, carried more. Producers outside the Gulf lifted output into an unusually profitable market. High prices did what high prices do to demand, particularly in price-sensitive importing economies. And some cargoes continued to move, intermittently and at enormous insurance cost, because the strait has been dangerous rather than physically sealed.

None of that means the closure was harmless. It means the harm was absorbed through cost and rerouting rather than through shortage, which is a different and slower kind of damage. We set out the demand side of this in our earlier look at why the price stalled below one hundred dollars.

What has it cost, then?

Chiefly the countries closest to it, and chiefly in ways that do not show up in the crude price.

Producers have earned more per barrel and moved fewer of them, with higher freight, insurance and storage costs against the gain. That mixture is visible in Aramco's first half results. Regional aviation has been hit far harder than energy: the International Air Transport Association expects Middle Eastern carriers to turn a 7.2 billion dollar profit in 2025 into a 4.3 billion dollar loss this year. Jet fuel in June was running about 46 per cent above year-earlier levels.

And the inflation channel has been steady rather than dramatic. Higher energy costs feed into transport, food and manufacturing over months, not days, which is why central banks have found this shock so awkward to answer. That problem was covered in our July piece on oil and the central banks.

What would a wider war actually do?

Here the modelling is worth taking seriously, because it is specific.

Work published through the Centre for Economic Policy Research estimates that a closure lasting a single quarter raises United States headline inflation by about 0.6 percentage points and core inflation by 0.2 points across 2026. At 170 dollars a barrel, the effect on both inflation and growth roughly doubles, which is the point at which the shock stops being an inflation problem and becomes a stagflationary one: prices rising while output falls, the combination central banks have no clean tool for.

The escalation that would produce that is not a longer closure of the strait. It is damage to production rather than to transit, meaning strikes on fields, processing facilities or export terminals. The strait is a road. Roads can be rerouted around at a price. A destroyed processing plant cannot.

What should a reader watch?

Not the daily Brent print, which mostly reflects sentiment about the next headline.

Watch the vessel transit count, because it measures the thing itself. Watch whether attacks shift from ships to shore infrastructure, because that is the line between an expensive disruption and a genuine supply crisis. Watch the Oman channel, because it is the only negotiation currently described by either side as advancing. And watch insurance rates for Gulf transits, which price the risk more honestly than any commentary, since the people setting them are paying out on being wrong.

Six months in, the sober conclusion is uncomfortable in both directions. The world absorbed the closure of the most important oil chokepoint on earth better than almost anyone predicted. It also has not solved it, and the adaptation that made the absorption possible has already been used.