The Strait of Hormuz, a critical energy trade route, will not fully reopen until the second half of 2026, according to projections from Baker Hughes and the International Energy Agency (IEA). The ongoing U.S.-Iran conflict has severely disrupted global oil and liquefied natural gas (LNG) supplies, with the strait's closure impacting 10% of global oil volumes and 20% of LNG supplies.
Part 1: Immediate Action & Core Facts
The Strait of Hormuz remains largely closed due to geopolitical tensions, with Baker Hughes and the IEA warning of prolonged disruptions. Baker Hughes CFO Ahmed Mogal stated the strait will not reopen until the second half of 2026, while the IEA predicts the conflict will keep natural gas markets tight through 2027. The closure has already caused the largest oil supply disruption in history, with Iran blocking exports by attacking tankers and enforcing competing blockades with the U.S.
Part 2: Deeper Dive & Context
Impact on Energy Markets
The closure has led to persistent risk premiums for oil and LNG prices, according to Baker Hughes CEO Lorenzo Simonelli. The IEA estimates a cumulative loss of 120 billion cubic meters of LNG supply through 2030, delaying global LNG expansion by at least two years. Qatar's energy minister reported that damage to LNG facilities could take up to five years to repair.
Geopolitical and Economic Consequences
The Federal Reserve Bank of Dallas surveyed nearly 100 oil and gas executives, with 80% believing the strait will not reopen until August or later. The conflict has triggered demand-side measures in Asia to reduce natural gas use, further tightening markets. The U.S. and Iran have seized commercial ships, escalating tensions despite a fragile ceasefire.
Long-Term Implications
The IEA warns that the duration of the strait's closure remains a key uncertainty for global gas demand in 2026. While new liquefaction projects may offset losses over time, the disruption will prolong tight markets through 2027. The conflict has solidified geopolitical risk as a structural reality for oil and gas markets.