I don't think so.

About 20% of the crude oil and natural gas used to come via the Strait of Hormuz. That's out now, and some oil drills will need to be shut down, and it will take 3 months to 2 years to restart them.

But about half of that could be redirected via some pipelines in Saudi Arabia and the UAE.

So, only about 10% of the oil supply is missing.

But was the entire supply in the rest of the world completely without any slack? Everything was running at capacity, with zero capacity to increase deliveries? I doubt that. Let's split the 10% supply reduction into 5% that the rest of the world can provide, incentivized by the higher prices, and 5% demand destruction, incentivized by the same higher prices.

The rule of thumb in the oil markets is that a 1% reduction in supply results in a 10% increase in price. So a 5% reduction in supply should result in a 50% increase in price. We are there, actually a bit higher. Brent was trading at about $65 until February 2026, and now it's at $120. That's more than 80% higher. All these numbers have high uncertainly bars, of course, but so far it looks to me that the market is not reacting in a patently irrational way to the events.

Even 10% is a massive number. Most oil demand is fairly inelastic. You have to get to work no matter the price of gasoline. You might turn your furnastat down a degree, but that's about it. Groceries need to get delivered no matter the price of diesel. Farmers need to fill their tractors no matter the cost. Plastic and industrial demand is fairly inelastic. The price doesn't need to go up by much to reduce demand by 1%. But to reduce demand by 10% involves massive price increases. Only a fraction of gasoline demand is truly elastic. So that 10% reduction in supply might require halving the elastic demand for oil.

The 1970s oil crisis was only losing 5-7% of total production. We are most likely double that amount right now.

> About 20% of the crude oil and natural gas used to come via the Strait of Hormuz.

20% of the world's oil production. But only half is sold on the international market, the rest is used domestically. So roughly 40% of the world's purchasable oil comes through the Strait.

> But was the entire supply in the rest of the world completely without any slack? Everything was running at capacity, with zero capacity to increase deliveries?

I'm trying to find some numbers here and failing utterly (thanks AI for utterly ruining search). But my recollection from when I've seen it discussed in the past is that the vast majority of slack oil production is in the OPEC countries--essentially everybody not in OPEC produces every drop they can--and even of that, the really big source of slack is Saudi Arabia. You know, all of the places that are currently unable to ship any oil because of the closure of the Strait of Hormuz.