ARC ENERGY IDEAS Strait of Hormuz Closure and the Oil Price Roller Coaster
Mar 10, 2026
War-related attacks on Middle East energy infrastructure and tanker avoidance of the Strait of Hormuz. A sharp WTI spike and steep backwardation in futures markets. SPR release talks, inventory draws, and rationing risks. LNG price shocks and scramble for shipments. Potential winners: renewables, nuclear, EVs, Russia, and secure Canadian supplies.
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LNG Flows Also Hit Hard Causing Global Price Spike
- About 20% of global LNG transits the Strait too, so international gas prices nearly doubled from ~$10 to ~$20, pressuring European and Japanese industry.
- Jackie Forrest cites international LNG spikes and Canada's domestic insulation from those price moves.
SPR Release Is Short Term Relief Only
- A coordinated IEA/G7 SPR release of 300–400 million barrels can only cover a few weeks of lost flows; it stabilizes markets briefly but is not a long-term fix.
- Jackie Forrest notes 300–400 million barrels equals only ~20 days if ~20 mb/d is blocked.
A Month Of Blockage Would Draw Inventories To Five-Year Lows
- Global observed inventories were elevated (~8.2 billion barrels) but a month-long blockage could drop inventories to five-year lows, supporting much higher prices.
- Jackie Forrest compares potential drawdown to 2022 lows when oil hit ~$120.