What the Strait of Hormuz is
The Strait of Hormuz is a narrow waterway between the Persian Gulf and the Gulf of Oman. It is the main sea route connecting major oil-producing states in the Gulf with customers around the world. Tankers use it to carry crude oil, refined fuels and liquefied natural gas to Asia, Europe and other markets.
Its importance comes from geography. Ships leaving several large energy exporters have limited practical alternatives. Pipelines can move some supply around the waterway, but they cannot replace the full capacity and flexibility of maritime trade.
Why markets react before a disruption happens
Oil is traded in a global market, so prices reflect expectations as well as barrels already delivered. If traders believe shipping could become slower, more expensive or less safe, they may price in a risk premium immediately. That can happen even when the physical supply of oil has not yet changed.
Insurance is part of the calculation. A higher security risk can increase insurance and freight costs, making each cargo more expensive. Buyers may also seek alternative supplies, which pushes up prices in other regions.
What happens to fuel prices
Crude oil is only one part of the price motorists see at a petrol station. Refining, transport, taxes, currency movements and local competition all matter. Even so, a sustained rise in crude prices usually creates pressure across petrol, diesel, aviation fuel and products made with petrochemicals.
