The Strait of Hormuz Crisis Is Driving a Wave of Global Energy Rationing

Iran’s effective closure of the Strait of Hormuz, one of the world’s most important energy transit routes, has caused a global oil shortage that is already affecting consumers from Europe to Asia and beyond.

Some nations are now taking extraordinary measures to maintain fuel supplies, as they grapple with the potential for long-lasting disruptions to the global supply chain.

Iran has closed the Strait of Hormuz to most traffic since the United States and Israel launched a widespread bombing campaign against it on Feb. 28. Around a fifth of the world’s oil flows through the Strait of Hormuz, providing a strong bargaining chip for Iran’s government.

Iran has targeted oil-producing Gulf states that host U.S. military bases, disrupting the production of oil even further. 

Read More: A Long Gulf War Can Starve the World. A Hormuz Transit Deal Could Save Millions

President Donald Trump has threatened to attack Iran’s power plants if it does not reopen the Strait, writing on Truth Social Sunday morning: “Open the F—in’ Strait, you crazy b—tards, or you’ll be living in Hell.”

The closure of the Strait has led to price spikes and shortages worldwide. Here is where those shortages are being felt the most. 

Jet fuel shortages across the world 

Europe's airports have begun imposing restrictions on refueling due to a shortage of jet fuel, and airlines have preemptively canceled flights.

In Italy, four airports in Bologna, Milan, Treviso and Venice placed some restrictions on jet fuel through Thursday, according to an official notice, which says that “due to limited fuel availability from Air BP Italia, refueling services for operators contractually linked to Air BP Italia may be subject to restrictions.”

Flight cancellations and disruptions in the UK have already begun, with Guernsey’s Aurigny airline canceling some flights from mid-April to early June. Ryanair CEO Michael O’Leary also predicted summer cancellations of 5 to 10% of flights if the Strait of Hormuz stays closed.

“Of all the European countries at the moment, the one that is most vulnerable is the UK because of the market share that the Kuwaitis have here,” he said. “There could be a surplus of jet A-1 fuel in the Middle East, but you have still got to ship it to Europe and we don’t know when or how that happens.”

The predictions come as jet fuel averaged $195 a barrel last week, according to the International Air Transport Association, more than double the average last year. 

The cost of jet fuel in the U.S. has surged by 95% since the war began, according to the Argus U.S. Jet Fuel Index.

Shortages are raising the price of travel, with airlines offsetting rising operational costs by raising baggage and ticket prices.

“It may be a challenge to continue passing through much of the increased fuel price if oil stays higher for longer,” United Airlines CEO Scott Kirby said in a memo to the company.  “In the short term, that means tactically pruning flying that’s temporarily unprofitable in the face of high oil prices.”

Robberies in Bangladesh

In Bangladesh, the fuel shortages and panic have resulted in a spike in robberies, as people raid gas stations and fuel trucks in order to stockpile supplies.

Mohammad Najmul Haque, president of the Bangladesh Petrol Pump Owners Association, told the Washington Post that attacks are reported every day across the roughly 3,000 fuel stations in the country. The appearance of huge lines of people panic-buying fuel has contributed to a cycle of fear, leading others to do the same. Some gas station managers have been beaten—or even killed—Haque and Bangladeshi officials reported, over the fuel shortages.

The South Asian nation of 175 million people relies on imports for roughly 95% of its energy needs, making it particularly vulnerable to the closure of the Strait.

Bangladesh has cut office hours and public spending this past week in an attempt to curb the fuel crisis, forcing markets and shopping centers to ​shut by 6 p.m. to reduce electricity use.

Taking the bus in Australia and New Zealand

Even though countries like Australia and New Zealand receive most of their fuel from Asia—especially China, Singapore and South Korea— those nations rely on crude oil flowing through the Middle East. 

With China restricting exports, the Australian government has tried to quell public fear to prevent panic buying. 

Australia’s prime minister, Anthony Albanese, addressed the nation on April 1, reassuring Australians that the government was prepared for fuel shortages. He also urged citizens to take public transportation in the coming weeks to keep fuel for farmers, miners, and other workers in “critical industries.”

“Enjoy your Easter. If you’re hitting the road, don’t take more fuel than you need — just fill up like you normally would,” Albanese said. “If you can switch to catching the train or bus or tram to work, do so. That builds our reserves and it saves fuel for people who have no choice but to drive.”

The country’s energy minister, Chris Bowen, said Saturday that more than 50 ships carrying fuel are on their way to Australia and are expected to arrive this month.

“[F]uel is going out the door to service stations and farmers, fuel is coming in the door at Australia's import terminals, and our refineries are working full pelt,” he told reporters.

Still, farmworkers and grocery stores are bearing the brunt of much of the fuel and fertilizer shortages, with grocery prices expected to surge in the coming weeks.

Meanwhile, Air New Zealand has started cutting flights in the next couple of months to save on fuel, and the New Zealand government announced it will give nearly 150,000 families a weekly cash payment to help them afford fuel.

South Korea saves ‘every drop of fuel’

South Korea has ramped up its call for energy conservation. President Lee Jae Myung urged citizens to "save every drop of fuel” in a parliamentary address this past week.

"The current crisis is not a passing shower that quickly subsides, but rather a massive storm whose duration is uncertain, making it all the more severe,” Lee said, calling on citizens to use public transportation.

The government has already taken other precautionary measures, including imposing a fuel price cap and implementing a fuel tax cut. It is also exploring other energy options to offset supply chain problems, including delaying the shutdown of coal-fired power plants and lifting caps on coal-fired electricity.

Korean Air, meanwhile, is instituting “internal cost-reduction measures,” with the possibility of flight cancellations.

Southeast Asian work from home

In late March, the Philippines declared a national emergency due to high oil prices, which had a particularly harsh impact on the nation because it imports 98% of its oil from the Gulf.

The Philippine government has called on workers to carpool, and some government offices have switched to a four-day workweek to conserve driving fuel.

Similarly, Thailand, Vietnam, and Indonesia are encouraging remote work for civil servants. Vietnam’s trade ministry called on businesses to “encourage work-from-home when possible to reduce the need for travel and transportation.”