As tensions continue to heat up in the Middle East, concerns are raising about disruptions to one of the world’s most critical energy shipping routes, the Strait of Hormuz. Any disruption could significantly affect major oil-importing countries such as India, as the narrow Strait of Hormuz is central to global energy trade. The strait sees almost 20 million barrels of oil passing through each day, or about a fifth of the world’s consumption, pass through the route. The waterway also carries roughly 19% of global liquefied natural gas (LNG) shipments, making it a crucial corridor for energy-importing economies.A recent report by Goldman Sachs has flagged early signs of stress in the region. The report warned that tanker traffic through the Strait of Hormuz has already begun showing signs of disruption, with shipping firms, oil producers and insurers adopting a cautious approach following reports of damaged vessels in nearby waters.According to the firm, financial markets have already begun factoring in the geopolitical risk. Oil prices currently carry an estimated risk premium of $18-per-barrel, reflecting the potential market impact if energy flows through the Strait of Hormuz were disrupted for about a month.

Even is the oil facilities are not directly damaged, a shutdown of the shipping route could expose a significant portion of global supply. The report estimates that in an event of full closure, about 16 million barrels per day of oil flows could be affected, despite the availability of some pipeline routes designed to bypass the strait.And the risks are not limited to crude oil shipments with almost 80 million tonnes of LNG exports annually, much of it from Qatar, moving through the passage. Any prolonged disruption could tighten gas supply globally and potentially drive European benchmark gas prices back to levels seen during the 2022 energy crisis.

Asian economies stand among the most exposed to such disruptions. Major importers such as China, India, Japan and South Korea depend heavily on oil and LNG shipments that transit through the strategic corridor.While global oil inventories and spare production capacity could help cushion short-term shocks, the report warned that sustained disruption to Gulf shipping routes could trigger sharp volatility in global energy markets and push prices higher across oil, gas and refined fuel products.Market participants and governments are closely watching tanker traffic in the Strait of Hormuz, along with diplomatic and military developments involving the United States, Iran and Gulf nations, to assess whether the current disruptions remain temporary or escalate into a broader energy supply shock.

The benchmark KSE-100 Index climbed sharply during the trading session, rising 4,439.93 points (2.85%) to reach an intraday high of 160,217.14 points.

Market Recovery

Analysts attributed the market rebound to renewed institutional buying and improving investor sentiment after Saudi assurances on oil supplies.

Market expert Ahsan Mehanti, CEO of Arif Habib Commodities, said easing fuel supply concerns played a key role in the recovery.

He added that rising global crude prices, expectations of a new International Monetary Fund loan tranche for Pakistan, and positive economic indicators also boosted investor confidence.

Alternative Oil Route

Pakistan sought an alternative supply route after Iran announced the closure of the Strait of Hormuz, a crucial global oil transit corridor.

Federal Petroleum Minister Ali Pervaiz Malik held talks with Nawaf bin Said Al-Malki, requesting Saudi support for uninterrupted energy supplies.

Saudi authorities reportedly assured Pakistan that oil shipments could be routed through Yanbu, and one crude vessel has already been prepared for dispatch.

Global Oil Market Impact

Oil prices continued to rise amid tensions in the Middle East conflict involving Iran, Israel and the United States.

Brent crude: up 3.26% to $83.99 per barrel

West Texas Intermediate (WTI): up 3.70% to $77.42 per barrel

Energy markets remain volatile as shipping disruptions threaten supply through the Strait of Hormuz, a route that handles nearly 20% of global oil trade.

Analysts say the Saudi assurance helped calm fears about Pakistan’s energy supply chain, contributing to the strong recovery at the PSX.