Current reports are already showing the impact and telling the real story. Oil prices have already surged sharply, even before any global markets have reopened. Analysts are warning that prices could move toward or beyond $100 per barrel, especially if the situation develops into a long-term disruption. The underlying reason is extremely simple: the Strait of Hormuz is not just another shipping route, but a pivotal energy lifeline. It is the place where roughly one-fifth of global oil supply passes through, while also immense volumes of LNG flow. The latter would have increased substantially in the coming months and years, thanks to the investments made by ADNOC, Aramco, and QP Energy. The market is starting to realize, but not yet fully, that when tanker owners, traders, and energy majors begin suspending shipments, as is plain to see or even online, the market will stop trading physical barrels and enter a fear-trading situation.

Again, as stated in other articles of mine, what really matters is not whether Iran formally declares the Strait closed, but the psychology behind it. A closure in modern energy markets has a much stronger psychological effect, even before it becomes physical. The increase in warnings given by Tehrani powers, especially the IRGC, to vessels is already causing havoc. At the same time, there are missile incidents near shipping lanes or even real attacks on tankers (next to Oman). This will have insurers rewriting war-risk policies, which will cause enough stress to dramatically slow flows. When looking at the tanker, which was not even in Hormuz but anchored off Oman, the latter has already demonstrated that commercial risk calculations have changed overnight.

This distinction is critical, as global energy markets today operate on just-in-time logistics, which is still disguised as abundance. In oil markets, spare production capacity is largely on paper, while storage buffers are thinner than policymakers admit. When focusing on LNG trade, the latter lacks redundancy. The assumption that cargoes can “reroute” is also very strange, as it ignores geography. For crude oil, there are options to move slowly through alternative pathways; for LNG, especially Qatari, but also Abu Dhabi LNG, this option doesn’t exist.

And this is where the crisis becomes truly dangerous: Qatar.

Yes, the Qatari Peninsula is the backbone of global LNG flexibility. While its other roles in geopolitics may be subject to questioning or criticism, Qatar’s exports account for a substantial share of marginal supply balancing between Asia and Europe, which is crucial in the current situation. As widely reported, around 20% of global LNG trade transits Hormuz. Most of this is Qatari cargoes, all of which underpins winter security in both regions. For outsiders, it needs to be recognized that if those volumes disappear, even for a very short period, the effects will be severe. The direct result is that the LNG market will not tighten gradually; it will fracture.

Currently, maybe even early, signals indicate this risk is already in the market. LNG tankers are turning away from the Strait. At the same time, increased navigation warnings are disrupting scheduled sailings. To be clear, this is not a theoretical disruption, but a physical hesitation entering the supply chain.

Again, overall consequences will be asymmetric. Europe will feel stress, but Asia will face a real shock.

At present, Europe continues to benefit from its diversified LNG sourcing following the Russian gas crisis. Still, the market is under stress, as storage levels in this phase are significantly lower than last year. Europe is currently clearly exposed to a sudden tightening of supply. It should maybe not be said, but Europe still retains one advantage (which is not a real one, but is sometimes pushed by green zealots): demand destruction mechanisms already exist, even after years of high prices.

Asia does not.

Asia, however, is not in the same situation. It is clearly, and for much longer, structurally dependent on Gulf crude and LNG. Of all the crude oil passing through Hormuz, around 84% heads toward Asian markets. The latter means that even if some argue that these markets will take Russian crude, any disruption will hit China, India, Japan, and South Korea first and hardest. At the same time, not all Asian economies can easily substitute pipeline gas or domestic production. Asian clients will have to compete on price, and for Europe to wake up, they will!

This is why next week is likely to mark the beginning of an energy bidding war.

Beijing will for sure prioritize energy security over price discipline. Japan and Korea will be defending supply reliability at any cost, while emerging Asian buyers will most probably be left without it, as they will be priced out entirely. Europe, the world’s 2nd-largest economic market, will face low storage and political pressure, as always, to avoid another energy crisis, which would be politically committing suicide. Europe (EU/UK) will have to enter the Atlantic Basin market aggressively. The result is predictable: LNG will, with a big bang, become a premium commodity again. This will no longer be a balanced global market.

Analysis of its models shows that even a temporary Hormuz disruption will result in European gas benchmarks surging dramatically, especially if Qatari LNG disappears for only a few months. Put now that situation or scenario colliding with Asian panic buying and shipping disruptions simultaneously.

Even before the US-Israeli military actions against Iran, the global LNG market was already tight. Even with major expansions, real new supply additions are expected later in the decade, not now. Global upstream developments have slowed due to years of underinvestment, ESG constraints, and regulatory uncertainty. It is remarkable or even outright strange that the illusion of surplus still existed only because demand growth temporarily softened in parts of Europe and China. This illusion, as it is nothing else, is now removed instantly by war.

Don’t look only at LNG markets; a similar structural reality applies to oil markets as well. At present, price scenarios are discussed that exceed $100 per barrel. Some others are even indicating that brief blockades could push prices toward $120–$150. They are, in reality, not even speculative extremes. These extremes are, at present, just reflecting the sheer volume and concentration moving through a single narrow maritime chokepoint. At the same time, some realization is starting to resurface in the market about the so-called 2026 oil glut.

It seems that the key misunderstanding among policymakers is believing, almost like a religion, that OPEC+’s spare capacity can quickly stabilize markets. Production increases announced for April should be considered marginal, especially given the potential disruptions of several million barrels per day. Even if the main OPEC+ producers will pump more, geography and IRGC interventions show that these barrels cannot reach markets. Shipping lanes have at present become commercially unusable.

This is why shipping—not production—will determine price direction next week. At least, as long as Iran or proxies are not attacking Saudi-UAE oil infrastructure assets, such as Abqaiq, the US will not blow-up Iran’s Kharg Island. If this happens, a doomsday scenario is in place, pushing prices beyond $150 per barrel without hesitation.

At present, insurance premiums are rising. Markets have definitely priced the last hours as a “Hormuz premium” into freight and commodity contracts. The main question will be on which basis there is still a major chance of underpricing the real risks. When insurance withdraws, ships wait. When ships wait, inventories drain. When inventories drain, panic buying begins. Energy crises rarely start with shortages; they start with hesitation.

When looking at geopolitics, the current developments are profound. For years, the world, industry, and politicians have believed in globalization. The latter has also been the shipping case, as all parties assumed maritime chokepoints would remain politically neutral infrastructure. This, as stated before in other analyses, is no longer the reality. Hormuz has once again become an active strategic lever, reminding markets that geography still governs energy security.

For global energy, but especially for Europe and Asia, the real irony is that Iran does not need to close the Strait to achieve strategic success fully. A partial disruption already puts inflationary pressure on Western economies and imposes immense strain on Asian importers. When looking at energy, it also clearly exposes vulnerabilities in Western energy transition narratives that assumed stable global trade flows.

There will be winners, as always. Exporters outside the Gulf, especially from the United States, will be looking to make major gains in pricing power in the West African arena. Atlantic Basin LNG cargoes will be among the most fiercely contested assets. US LNG exporters may even find themselves in a position as de facto stabilizers of global energy markets. Still, don’t overestimate the latter, as the US LNG capacity constraints will limit how much relief they can provide in the short term.

Investors will be looking at a situation on Monday that, in their view, resembles previous crisis openings. They are going to be hit by reality, as the situation is structurally different. This is not a demand shock like COVID, nor a Western sanctions shock like Russia’s invasion of Ukraine. The current situation is a real chokepoint shock, to be assessed as targeting the logistical heart of global energy itself.

Global financial markets will brace for increased volatility. Sharp swings are expected when trading resumes. The main driver will be uncertainty about supply security. This is, however, not only a volatility issue. The real shift for financial markets will be psychological. Traders, investors, and others will need to get to grips with the fact that energy supply chains are once again hostage to geopolitical escalation.

If there needs to be a bet on immediate winners, put your money on oil producers and energy exporters. The clear losers, whatever happens in the next 24 hours, will be energy-importing economies, especially in Asia. Inflationary pressure will re-emerge, which will be a shock, as central banks were expecting stability to return. Singapore and other Asian economies are already warning of inflation risks tied to rising oil and gas prices.

For all, the important consequence of the Iran conflict and Hormuz is strategic, not economic. The conflict, as geopolitical analysts have been stating for years, reveals a simple fact in energy markets, but especially for LNG markets. The latter are framed always as flexible and resilient, but reality shows again that LNG is tightly concentrated around a handful of export nodes and maritime corridors. Remove one, and competition becomes brutal.

Don’t think that Europe and China are ideological rivals in energy markets; they are not, only competitors for molecules. When scarcity emerges, solidarity, however, disappears.

Asia is likely to pay the highest prices next week. The Asian continent has a deeper dependence on Gulf flows, while it also has fewer alternatives. Asia’s demand growth is also structurally stronger. Europe and its customers or industry will be subject to volatility, as Asia will face bidding pressure.

All in all, policymakers will face an uncomfortable conclusion they have avoided for years. Energy transition policies did not eliminate geopolitical risk; they only have redistributed it into new dependencies. These dependencies are linked to LNG shipping routes, critical maritime infrastructure, and politically fragile supply regions.

In a situation in which Hormuz remains contested for weeks, not days,  the world will rediscover a reality last experienced during earlier oil shocks. Energy security doesn’t depend on underground reserves, nor do they determine it. The real determining factor in it all is ships at sea.

Monday’s market opening could mark more than another price spike. It could be the first day of energy markets acceptance that geopolitics, not supply forecasts or Excel sheets, are setting the true price of oil and gas.

The question at present that should be on the minds of most parties involved is not whether prices will rise. The question to be answered is how high Asia and Europe are willing to bid against each other to keep the lights on. This will be the case for LNG, but also crude oil!