Hormuz Crisis Tests Global Energy Systems, But Resilience Holds

The global energy system has demonstrated significant resilience in the face of the Strait of Hormuz crisis, but existing shock absorbers are being depleted. The disruption, which affected about 14% of global combined oil and gas supply, was triggered by a halt in oil flows through the strait. At its peak, this disruption impacted around 21.3 million barrels per day, but residual flows and inventory-building reductions brought the effective supply-demand gap to 15.5 million barrels per day.

Bypass pipelines and additional production addressed around 35% of that gap, with Saudi Arabia's East-West pipeline and the UAE's ADNOC pipeline to Fujairah rerouting 4.7 million barrels per day. Increased production in Brazil, Kazakhstan, the US, and Venezuela also contributed an extra 0.5 million barrels per day. Inventories accounted for another 20%, with countries drawing about 3.5 million barrels per day.

Reduced oil consumption accounted for roughly 45%, or 6.8 million barrels per day, as global economies adapted to the crisis. However, the buffers that prevented a larger shock are being depleted, and McKinsey warns of emerging risks in refining capacity and refined-product inventories.