Oil & LNG Squeeze Intensifies as Strait Flows Plummet

## Catalyst Analysis: Hormuz Strait Flows Collapse, Energy Squeeze Looms

Flows through the Hormuz Strait have reportedly fallen to approximately 11% of pre-war levels, signaling a deepening crisis in global oil and liquefied natural gas ($LNG+WL) markets. This sharp decline is expected to fuel an increasingly severe squeeze on diesel and other refined fuels, leading to higher crack spreads and upward pressure on consumer prices.

The International Energy Agency (IEA) anticipates a global oil supply reduction of 4.3 million barrels per day this year, a forecast that could exacerbate the energy crunch as geopolitical conflicts persist. This situation indicates a potential for sustained elevated energy costs.

## Impact on Energy Markets

### Winners, Losers & Uncertainty

Energy producers and refiners could see increased margins if they can secure supply lines and navigate logistical challenges. Conversely, consumers and industries reliant on refined fuels face rising costs and potential shortages. Uncertainty remains high due to the ongoing geopolitical instability affecting major transit routes.

### Risk Watch — Legal/Timeline

The situation hinges on the duration of geopolitical tensions impacting the Hormuz Strait. Any further disruptions or escalations could lead to more severe supply constraints and price volatility. The IEA's supply outlook suggests a tight market throughout the year.