Global Oil Supply Routes

The world's most critical oil chokepoint is in active disruption. Traffic has fallen to a small fraction of normal levels, with only a handful of vessels transiting and major operators suspending Gulf loadings. Iran is effectively controlling passage conditions. The ~20 mb/d that normally flows through the strait — around 20% of global oil trade — is severely constrained.

Bypass routes no longer provide meaningful relief. Saudi Arabia's East-West Pipeline capacity has been reduced by attacks on Saudi output. The UAE's ADCO pipeline at 3.5–5.5 mb/d cannot absorb displaced volumes at scale. IEA coordinated reserve releases are under active consideration. The disruption is compounding the existing Red Sea/Bab-el-Mandeb crisis.

The southern entrance to the Red Sea remains actively disrupted by Houthi attacks since November 2023. Around 4.5 mb/d of oil and products normally transits this route. The shipping industry continues to largely avoid Bab-el-Mandeb, with daily traffic far below pre-attack levels. This disruption now forms part of a wider compound crisis alongside the Hormuz near-standstill.

Operation Prosperity Guardian has not restored normal transit confidence. Insurance premiums for Red Sea passage remain prohibitively elevated. The Houthi threat and Hormuz disruption are geopolitically linked — both tied to the same regional conflict — creating a compound supply shock with no near-term resolution pathway visible.

Chinese naval and coast guard vessels have established a blockade around Scarborough Shoal, disrupting Philippine maritime access and raising the risk of broader interference with commercial tanker traffic. The sea lane carries approximately 3.4 mb/d of oil — primarily Middle Eastern crude transiting to China, Japan, and South Korea — along with significant LNG volumes.

The Scarborough Shoal blockade escalates well beyond previous China-Philippines stand-offs and has drawn US statements under the Mutual Defense Treaty. A full closure of the broader South China Sea to commercial traffic would represent one of the most severe supply shocks in modern history. The situation is being monitored by the IEA and has been noted in IMF growth revisions.

The Suez Canal carries around 5.5 mb/d of oil and petroleum products plus significant LNG volumes. Houthi attacks have kept the Red Sea route effectively closed to most commercial tankers since late 2023, and Cape of Good Hope diversion is now the near-permanent operating norm for Gulf-to-Europe cargoes. Canal transit volumes remain far below pre-disruption levels.

The Sumed pipeline can carry approximately 2.5 mb/d of crude as a bypass but not refined products. UK and European refiners have largely adapted sourcing to Atlantic Basin and North Sea suppliers, but at higher cost. A resolution to Houthi attacks remains the necessary condition for Suez Canal volumes to recover.

The Danish Straits (Øresund, Great Belt, Little Belt) are the only maritime access to the Baltic Sea. Around 3 mb/d of Russian oil exports — primarily crude and oil products from Baltic ports (Primorsk, Ust-Luga, Kaliningrad) — transited this route before Western sanctions. Post-sanctions, the mix has shifted but Baltic tanker traffic remains significant.

NATO membership of Denmark and Sweden, and the proximity of Baltic submarine cable incidents, has raised strategic sensitivity around this chokepoint. Shadow fleet tankers carrying Russian oil still transit regularly, raising insurance and environmental concerns.

The Bosphorus and Dardanelles straits control access between the Black Sea and Mediterranean. Around 2.4 mb/d passes through, primarily Kazakhstani crude via the CPC pipeline and Russian Black Sea exports. Turkey has periodically restricted tanker passage, citing insurance and safety requirements linked to Western price cap sanctions on Russian oil.

Turkey controls passage under the 1936 Montreux Convention. Russia has contested Western price cap enforcement in these waters. Insurance requirements for tankers carrying sanctioned oil have been a recurring flashpoint.

North Sea production from the UK Continental Shelf (UKCS) peaked in 1999 at around 2.9 mb/d and has been declining since. Current output is approximately 1.4 mb/d of oil equivalent. Fields include Forties, Buzzard, and newer West of Shetland developments. Petroineos ceased refinery operations at Grangemouth in April 2025; the site now operates as an import and fuels distribution terminal.

The North Sea Transition Deal sets out a managed transition framework. New field approvals (Rosebank, Jackdaw) remain politically contested. Norwegian flows via the Langeled pipeline provide additional security for UK gas supplies, which affects heating oil demand dynamics.