Can it only last up to 25 days? JP Morgan warns: If the Strait of Hormuz is blocked, storage restrictions may lead to a complete shutdown of Middle East crude oil production

# Zhao Ying

Source: Wall Street CN

The crisis in the Strait of Hormuz has escalated abruptly. JPMorgan’s latest calculations reveal that if the strait were fully blocked, the combined storage capacity of the seven major Middle Eastern oil producers would only sustain production for **25 days**, after which they would be forced to halt operations entirely. Tanker traffic has effectively ceased, with daily exports plunging to just one-quarter of normal levels. Brent crude prices already incorporate a **$9–10 risk premium**, and the global energy market is approaching a critical point of physical supply disruption.

As tensions in the Middle East surge, the global energy market faces the most severe supply disruption risk in decades.

In a new report, the analyst team led by Natasha Kaneva at JPMorgan warns: should the Strait of Hormuz be completely sealed, the combined onshore and offshore storage capacity of Middle Eastern oil producers can only absorb stranded output for roughly 25 days, beyond which full production shutdowns will become unavoidable.

“Any longer, and storage bottlenecks will force production halts,” JPMorgan states. This assessment means that if the situation deteriorates further, the global energy market will confront not just a price shock, but a physical disruption to actual supplies.

According to CCTV News, U.S. President Donald Trump delivered a video address on March 1 local time, stating that the United States and Israel will continue military operations against Iran until all objectives are achieved.

Against this backdrop, even though the Strait of Hormuz has not been formally closed, shipowners have universally chosen to avoid the route, and tanker traffic has effectively ground to a halt. This vital chokepoint carries roughly one-fifth of the world’s oil and liquefied natural gas (LNG) shipments.

### Strait Traffic Has Virtually Stalled

The Strait of Hormuz is the maritime bottleneck around Iran. Normally, about 19 million barrels of liquid fuels—including 16 million barrels of crude oil—are exported daily through the strait. However, JPMorgan data show that on February 28, crude oil exports via this route plummeted to around 4 million barrels, nearly all of which were Iranian crude—equivalent to just one-quarter of normal daily exports.

While Saudi Arabia, the UAE, and other nations can divert some oil via pipelines to alternative sea routes, JPMorgan notes that the total capacity of these alternatives is extremely limited and cannot compensate for the shortfall caused by a full shutdown of the Strait of Hormuz.

### 25 Days: A Precise Calculation of Storage Limits

JPMorgan has conducted a detailed analysis of storage capacity across seven Gulf oil producers: Saudi Arabia, the UAE, Iraq, Kuwait, Qatar, Oman, and Iran.

The bank estimates that these countries hold approximately **343 million barrels** of onshore crude storage, enough to hold about 22 days of stranded output. Additionally, around 60 empty tankers in the Gulf region provide extra offshore storage buffer, totaling roughly 50 million barrels of crude—extending production by another three to four days.

Combined, Middle Eastern oil producers can maintain normal operations for only about 25 days under a full strait blockade. Beyond this threshold, storage facilities will reach saturation, leaving producers with no choice but to implement forced cuts or complete production halts.

### Elevated Risk Premium and Emerging Energy Inflation Pressures

Persistent tensions in the Middle East have left a clear mark on oil prices. JPMorgan estimates that current Brent crude prices already include a geopolitical risk premium of **$9–10 per barrel**, primarily linked to the Iran situation.

At the same time, energy price pressures are filtering through to consumers. JPMorgan data show that U.S. retail gasoline prices have risen from $2.83 per gallon in January to $2.94. While still about 6.7% lower than a year ago, an upward trend is firmly established.

JPMorgan notes in its report that global crude oil consumption rose by about 1.4 million barrels per day year-on-year in the first two months of this year—nearly double the bank’s earlier forecast. With strong demand and supply channels blocked, any further deterioration in the Strait of Hormuz situation would expose oil prices to far greater upside risks than currently reflected in market pricing.

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