Oil prices settled at their highest levels since June on Monday, as the conflict in the Middle East brings with it an inherent risk to the world’s available crude supplies.

At the center of those worries is the Strait of Hormuz — one of the most important maritime shipping routes in the world, which carries about one-fifth of the world’s seaborne crude oil. It allows cargo ships to pass through the Persian Gulf, the Gulf of Oman and the Arabian Sea.

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Read: The whole world is watching this critical energy chokepoint as Iran conflict enters more dangerous phase

“The potential impact on global oil supply and the world economy could be so significant that it is difficult to imagine a worst-case scenario — no tankers transiting the Strait of Hormuz — lasting more than a short while,” said Jim Burkhard, vice president and global head of crude-oil research at S&P Global Energy, in emailed commentary Monday.

A senior official from the Iranian Revolutionary Guards said Monday that the strait was closed and that Iran would fire on any ship trying to pass, Reuters reported, citing Iranian media.

Yet it really doesn’t matter whether the closure is official or not, said Tracy Cui, director of global gas research at OPIS. (OPIS is a unit of Dow Jones, the publisher of MarketWatch). Ships on the strait should already be coming to a halt given the level of risk out there, given safety concerns and rising shipping insurance rates, she noted.

“This is a supply shock with an uncertain timeline when the critical variable is duration,” Angie Gildea, KPMG’s U.S. energy strategy leader, told MarketWatch on Monday, noting that sustained disruption to the Strait of Hormuz “translates directly into a higher oil-price environment.”

On Monday, U.S. and global benchmark oil rallied, with prices marking their highest finish since June. West Texas Intermediate crude for April delivery CLJ26 CL.1 climbed 6.3% to settle at $71.23 a barrel on the New York Mercantile Exchange, while May Brent crude BRNK26 BRN00 added 6.7% to end at $77.74 on ICE Futures Europe.

There are “buffers” that can serve as temporary “stopgaps” to make up for the oil lost to an effective closure of the waterway.

Read: Iran conflict sparks talk of a return to $100-a-barrel oil and a Strait of Hormuz standstill

Around 20 million barrels per day of crude oil and petroleum products pass through the strait every day — the equivalent of about 20% of global petroleum-liquids consumption, according to the U.S. Energy Information Administration. That’s roughly 15.5 million to 16 million barrels per day of crude oil and about 4 million barrels per day of refined products and natural-gas liquids, said Rebecca Babin, managing director at CIBC Private Wealth.

“If flows were meaningfully restricted for a sustained period, that represents a very significant portion of globally traded supply,” she said.

Strategists led by Vikas Dwivedi at Macquarie said they believe the world can handle the strait being shut down for one to two weeks, but the impact on oil prices would escalate “rapidly after the third week, and definitely after the fourth week,” mainly because of “deliverability.”

Other outlets cannot release barrels close to the rate that would be lost through the strait, the Macquarie strategists said.

President Donald Trump on Monday said that the U.S. military campaign against Iran could last four to five weeks, or even longer.

Read: Trump leaves door open for extended U.S. campaign against Iran

The Strait of Hormuz is located in the Middle East, a region that’s home to five of the world’s 10 biggest producer states: Saudi Arabia, Iraq, the United Arab Emirates, Iran and Kuwait, according to the International Energy Agency.

Higher oil output from major oil producers could help. But even if more supply is on the market, “if it cannot pass through the Strait of Hormuz, it won’t make much of a difference,” said KPMG’s Gildea.

A decision by major crude producers over the weekend to lift output by 206,000 barrels per day starting in April appeared to be largely shrugged off by the oil market. The group had been increasing their production quotas through most of last year, but paused those increases for the first quarter of 2026 due to concerns about a global supply surplus.

By agreeing to lift production, the eight members of the Organization of the Petroleum Exporting Countries and their allies, who met virtually on Sunday, showed that they are prepared to use spare capacity if needed, but are “not willing to open the taps aggressively at this stage,” wrote Jorge Leon, senior vice president and head of geopolitical analysis at Rystad Energy, in a note Sunday.

OPEC+ still needs to manage spare capacity of around 3.5 million barrels per day “carefully,” because it’s a “critical buffer that cannot be deployed too quickly without reducing the group’s ability to respond to a larger disruption,” Leon said.

Other “workarounds” for a stoppage of maritime transit through the Strait of Hormuz are also very limited, said CIBC’s Babin. The most notable would be Saudi Arabia’s East-West pipeline, which allows crude to bypass the strait and reach the Red Sea.

The pipeline has spare capacity of roughly 3 million to 4 million barrels per day, Babin noted. That can “alleviate some stress, but clearly cannot replace” the full volume that normally transits through the strait. Also, it’s important to keep in mind that “diversion routes are not entirely risk-free,” she added, pointing out that the East-West pipeline has been targeted in prior regional conflicts.

Floating storage of oil — crude that’s been in storage in tankers on the water — can also provide some near-term supply flexibility, said Babin.

Strategic oil reserves, including the U.S.’s Strategic Petroleum Reserve, as well as commercial inventories held by the Organization for Economic Co-operation and Development, which stand at roughly 74 days of forward demand coverage, can provide an additional buffer that can be drawn upon in the short term, she noted.

The bottom line, however, is that if Strait of Hormuz flows were materially constrained for an extended period, “replacing those barrels quickly would be difficult,” Babin said.

“The issue becomes less about global production capacity and more about the ability to safely move oil, with shipping conditions and insurance markets playing an outsized role in determining how crude trades in the near term,” she said.

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