The winners and losers during oil's worst traffic jam in years

Don't let oil prices fool you. Crude oil futures contracts rose another 3% Wednesday morning, with U.S. benchmark WTI above $87 a barrel. (Ditto for the international Brent benchmark — topping $94 a barrel.) The upticks, smoothed to some degree by China and the U.S., belie the historic transformation underway in the Strait of Hormuz.

China has slashed its oil imports and the U.S. has cranked oil production amid the worst bottleneck in oil supplies since at least the 1980s, a result of the U.S.-Israeli war on Iran. These and other factors have helped cushion the blow. But American stockpiles are now running low and, 143 days in, tanker traffic is barely trickling through the Strait of Hormuz.

The flow has slowed to 14 ships per day, 77% off the passage's prewar average of 60 ships, tracking site Hormuz Strait Monitor said on Wednesday.

Despite the supply gridlock, global demand for energy remains and desperately seeks alternatives. So where does it go?

The Hormuz Roadblock

With the war's toll still adding up, a few nations and economic sectors stand to benefit from extended conflict around the crucial energy passageway, researchers say.

"Prolonged tensions seem inevitable," said Oxford Economics' head of global research Ben May, citing "deep mistrust and both sides' reluctance to make significant concessions."

The result: "Shipping firms will limit or stop voyages through the Strait, and Gulf States will redouble efforts to diversify routes, eventually reducing the Strait's strategic importance," May said.

Two weeks ago, the U.S. yanked Iran's short-lived, renewed authorization for oil sales. Last week, President Donald Trump reimposed a blockade of Iran's ports. U.S.-Israeli attacks have reportedly killed thousands of Iranians, and the war continues to crimp energy supplies.

If Strait traffic never fully recovers or takes a while to bounce back, which countries, sectors, and commodities stand to gain from the sea lane's decline?

Windfall From War

Producers and refiners benefit from elevated crude oil prices and stronger margins, "particularly for petrol, diesel and jet fuel," said Bridget Payne, who runs energy forecasting at Oxford Economics. Think: Saudi Aramco, ExxonMobil HoldingsXOM, and PetroChina. XOM is up 21% so far this year, better-than double the S&P 500's performance.

Oil and gas businesses also gain from hiked military spending, as do defense contractors such as BoeingBA, Northrop GrummanNOC, and Lockheed MartinLMT. The Department of Defense accounts for most of the U.S. government's fuel consumption.

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"As the world's largest oil producer and a major exporter of refined fuels, U.S. producers and refiners have been among the beneficiaries," Payne added.

Oil's Busiest Sea Lane Vs. Really Long Pipes

The war has led some Gulf state producers to divert a portion of their Strait traffic overland through crude pipelines. They "have been a critical offsetting mechanism, allowing some Gulf exports to continue and helping the market absorb the disruption," Payne said.

"Before the conflict, around 15 million barrels of oil per day of crude was exported through the Strait," she said. Others have estimated 20 million barrels or higher. "Existing pipelines have enabled Saudi Arabia and the UAE to bypass roughly 5 million barrels of this volume."

Payne sees some additional bypass capacity coming on line. The UAE may add another 1.5 million bpd by 2027's end. "Saudi Arabia is also likely to expand capacity," she said, "although plans have not yet been confirmed; an additional 2–4 million bpd by 2030 appears plausible." That's a far cry from solving bogged-down energy shipments. Mostly, it's limited to crude.

Natural Gas: U.S., Norway Benefit

Lutz Kilian, who runs energy research at the Dallas Fed, thinks U.S. domestic natural gas prices "will be somewhat insulated" from LNG disruptions. He noted that access to relatively cheap natural gas should boost the U.S. fertilizer sector, but cautioned that would not be sufficient to replace the gulf's full output of energy-intensive commodities, led by fertilizer, aluminum, and petrochemical feedstocks.

Norway will also see some upside, added Kilian, who directs the Fed's Center for Energy and the Economy.

"Existing natural gas producers, such as Norway, will benefit from higher prices, but there is no other country that could take up the slack in the natural gas market or, for that matter, the oil market and the fertilizer market, considering the size of the supply disruption," he said.

Clogged Strait, Demand Destruction

It's "difficult to gauge" how enduring supply disruptions might motivate other energy producers to hike production, says May, at Oxford Economics. He thinks oil demand destruction from the crunch and rising prices "may be temporary rather than structural."

Assuming that, at some point, supplies will again become reliable, he expects demand to come back too. May argues that shifts in behavior caused by rising prices — such as driving less — "will likely fade as the price and availability of fuel normalizes." Demand for renewables and electrified stuff varies by region and product.

For countries looking to shore up energy security with renewables and EVs — such as Pakistan and the Philippines — the war has been "an accelerator for the transition," Oxford University climate and energy professor Jan Rosenow told NPR.

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Reuters also reported that Japan is rapidly diversifying its oil sources, "with purchases from the United States and Russia surging, while declines in imports from the Middle East have moderated," according to Daiwa Institute of Research economist Koki Akimoto.

Japan had relied on the Middle East for as much as 95% of its oil imports before the war broke out.

India imports 85% of the oil it consumes, according to OilPrice.com. Before the war, about half of those imports came from the Middle East.

Russian oil continues to flow into the country at record rates. And supplies from the UAE and Saudi Arabia remain largely intact so far, OilPrice.com reports.

China's Surplus

China remains something of a wild card with regard to crude oil demand. Long the world's leading importer of energy, China has slashed crude imports so far in 2026. A number of researchers, including the International Energy Agency, see the country's demand for transport and combustion fuels reaching a plateau.

Its monthly crude intake plummeted 41% year over year in June, approaching a 10-year low. Imports are expected to decrease for the year, but also decreased as recently as 2024.

The rise of electric vehicles, natural gas-powered trucks and buses, and expansion of high-speed rail services are all affecting oil demand. On the power side, renewables, natural gas and nuclear are displacing traditional diesel-powered generators in China.

Still, no one is quite sure which direction demand will go once the Strait of Hormuz fiasco is cleared up. China's surplus crude hit a record 13.18 million barrels per day in December, up 17% year over year. As of April, China's oil stores exceeded 1.39 billion barrels, per the U.S. Energy Information Administration. That equals about 110 to 114 days of net imports.

The U.S. followed with 413 million barrels, about 125 days worth of imports. China does not reveal how much it draws from its strategic reserves.

China's refiners cut processing rates to 12.47 million bpd in June, down 17.7% from the same month in 2025, Reuters reported. That is the lowest point since the onset of the Covid pandemic in March 2020

Follow Harriet Weber on Bluesky or X. Text her on the secure messaging app Signal: hew.04.

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