There's a ton of incorrect information circulating about what the Strait of Hormuz actually means for America, and for oil markets in general. So let's clear some of that up using a series of bullet points (note: I posted this same list on X if you want a ready reference page that's easy to quote-tweet):
- The biggest destination for oil that passes through the Strait is China, followed by other major Asian importers (India, Japan, South Korea, etc.).
- For 1H25 (First Half of 2025), ~89% went to Asia.
- Only ~11% went elsewhere (Europe, USA, rest of the world).
- USA alone ≈ 2.5%
- The Strait represented only about 7% of total U.S. crude oil/condensate imports, and about 2% of overall U.S. petroleum liquids consumption.
- Most U.S. domestic production is light sweet crude (WTI being the major benchmark).
- A major reason we still import anything at all through the Strait is sour crude.
- Canada is our main source of sour (along with Mexico and other Western Hemisphere suppliers).
The U.S. is far less directly exposed than many people assume.
In 1H25, the U.S. imported ~0.4 million b/d of crude oil and condensate through Hormuz.
The reason the U.S. still imports Gulf barrels is not because America lacks oil. It's because most U.S. domestic production is light sweet crude, while many U.S. refineries still benefit from importing medium/heavier, sour grades.
So the main U.S. risk from a Hormuz disruption is price shock, not that American refineries suddenly “run out of oil.”
The hardest-hit buyers are in Asia, with Europe also exposed, especially through price effects.
It's worth noting that not all Mideast oil needs to pass through the Strait:
- Saudi East-West Pipeline (Petroline): Design capacity expanded to 7 million bpd. Reports from March–April 2026 confirm it has been ramped up to (or near) full capacity to bypass the strait.
- UAE ADCOP (Habshan-Fujairah): Capacity 1.5 million bpd, with potential to surge toward 1.8 million bpd.
But what about fertilizer?
U.S. nitrogen fertilizer production is heavily tied to domestic natural gas via the Haber-Bosch process, and the U.S. produces most of the nitrogen fertilizer it uses. But globally, a Hormuz disruption could still drive up LNG prices, squeeze ammonia and urea exports, and raise fertilizer and food costs, especially for import-dependent countries. The bigger risk is not that the U.S. “runs out” of fertilizer, but that the rest of the world faces another input-cost shock -- and that could bleed back to us through the global economy.
U.S. sectors that could do well in the event of a prolonged closure include LNG, oil, agriculture, and fertilizer exports.
The downsides are more obvious -- but it seems everyone is talking about those (real or imagined), so I don't feel the need to rehash all that in great detail here. Just sign onto X for five minutes and you'll see people predicting everything from "global depression" to "energy crisis" and more (for the record, I don't see this leading to a U.S. energy crisis -- we have too much domestic oil and the government always has "export bans" as a card of last resort if it ever came to it. High import nations are another matter and could very well face localized energy crises.). But a few of the more likely "negatives" that come to mind are: consumer inflation (higher gas, heating, diesel, etc.), potential global demand destruction, and the fact that while the U.S. is very well insulated, it is not "100%" insulated, so some short-term pain wouldn't be out of the question.
Market-wise, not much happened on Friday, but futures are indicating a minor gap down this morning, though about half of the opening futures gap has already been recovered.
The opening gap may still land within the green melt-up channel, so bears will need to keep pushing to turn it into anything.
And finally, SPX bounced solidly off its intermediate trend line:
Not much else to add beyond that. Trade safe.
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