The 2026 disruption in the Strait of Hormuz served as a stark warning, exposing critical weaknesses in the global energy security system. A new analysis from the McKinsey Global Institute (MGI) reveals that this event, which affected a peak of 14% of global oil and gas supply, was more than twice the relative impact of the major oil shocks of the 1970s and significantly larger than the 2022 Russia-Ukraine disruption.
While the global energy market managed to absorb the immediate shock, the crisis highlighted how quickly safety buffers can diminish. Energy security is evolving into a complex structural challenge, encompassing shipping routes, pipeline infrastructure, refining capacity, strategic inventories, and intricate geopolitical dependencies.
Buffers Worn Thin After Hormuz
Approximately 21 million barrels per day (mb/d) of oil, including crude and refined products, flowed through the Strait of Hormuz in late 2025. When the disruption occurred, global markets initially adjusted through several mechanisms. MGI estimates that reduced oil consumption accounted for roughly 45% of the lost supply. Other volumes were compensated by rerouting through alternative pathways, drawing down inventories, and shifting global trade flows, such as China reducing imports while the US increased exports.
However, these shock absorbers are not infinite. Following the crisis, global oil prices have risen, inventories have significantly fallen, and refinery systems are operating under increased pressure. Even alternative infrastructure, intended to bypass vulnerable routes, has proven susceptible. The disruption to Saudi Arabia's East-West pipeline, a key alternative route, underscored this problem, demonstrating that no single solution offers complete immunity.
The Global Chokepoint Problem
The vulnerability extends far beyond Hormuz. MGI data indicates that two-thirds of all global energy trade passes through maritime chokepoints. Key routes like the Strait of Malacca (handling roughly 23 mb/d), the Suez Canal, the Turkish Straits, Bab el-Mandeb, and the Panama Canal are all potential flashpoints. This means that merely reducing reliance on Hormuz does not eliminate the inherent risk; it often simply shifts exposure to another strategic route. Recent tensions around Yemen and the Red Sea, for example, have already highlighted how quickly new vulnerabilities can emerge, adding layers of uncertainty to global shipping and energy flows.
Pipelines Offer Partial Insurance, Not Full Solution
Nations are responding to these threats by accelerating investments in bypass pipelines, diversifying oil and gas supplies, and increasing electrification. McKinsey estimates that measures currently planned or underway could offset 35% to 70% of pre-crisis oil flows through Hormuz by 2030 if another major disruption occurs. This represents a substantial 7-15 mb/d, or 7-15% of global oil supply.
Yet, pipelines come with their own trade-offs. While they provide an alternative to maritime routes, their fixed nature means they cannot be easily re-routed in response to changing geopolitical circumstances. Moreover, backup infrastructure often remains underused for extended periods, acting primarily as an insurance policy whose true value only becomes apparent during a crisis.
India and China: Hedgers with a Coal Backbone
MGI categorizes India and China as "hedgers with a coal backbone." Despite being major net energy importers, their substantial domestic coal resources provide a crucial ability to switch fuels during supply disruptions. This offers a degree of domestic cushioning that many other import-dependent economies lack.
However, their vulnerability remains significant, with McKinsey estimating that 84% of their energy trade still passes through maritime chokepoints. For India, the Hormuz shock has reinforced the strategic importance of diversifying crude sources, maintaining robust strategic reserves, developing alternative shipping routes, enhancing domestic refining capacity, and ensuring the flexibility to switch between different fuels. The volatility in the LNG market post-disruption, where Asian spot prices surged and buyers like India turned to coal and oil, starkly illustrates these ongoing challenges.