05/12/2026
Thoughtof the week
The Strait of Hormuz has been closed since the U.S.-Iran
conflict began, cutting off the world’smost important
energy chokepoint. The result has been higher global
energy prices, with WTI crude peaking at $112 per barrel,
and increased scrutiny of countries’ strategic petroleum
reserves, as import-dependent economies receive less oil at
a significantly higher cost.
Many countries appear well positioned in terms of net
import coverage. Several Asian economies reliant on
imports have among the highest reserve coverage globally,
with Japan and South Korea holdingmore than 200 days of
reserves. Despite having the world’s largest reserves, China
has similar coverage to Europe and Taiwan at roughly 120
days. The U.S. holds the second-largest reserves globally
but is a net exporter of oil,making comparisons less relevant.
Following the closure, the International Energy Agency (IEA)
announced its largest emergency oil stock release on
record, with 32member countries set to release 400million
barrels over the comingmonths,more than twice the
amount released during the 2022 Russia-Ukraine conflict.
Strategic reserves are not designed to eliminate energy
shocks, but to provide temporary flexibility during periods of
disruption. During geopolitical crises or supply chain interruptions,
the ability to stabilize domesticmarkets and support
critical industries becomes increasingly valuable.
Finally, while the releasemay appear substantial, the world
consumes roughly 100million barrels of oil per day, about
20% of which flows through the Strait of Hormuz. This is
equivalent to roughly 4 days of global consumption, or 20
days of Strait flows, which underscores the importance of
reopening the Strait.
*Source: JP Morgan Guide to the Markets Dated 5/11/2026
