If the Strait of Hormuz closes — or even stays partially disrupted — global oil prices will spike dramatically, and there is no quick replacement for what flows through it. That's the blunt assessment from energy expert and Fossil Future author Alex Epstein, who sat down to break down the crisis in plain terms. Roughly 20 million barrels of oil per day pass through the Strait of Hormuz. That's more than total US oil production. There is no pipeline, no alternate route, and no spare capacity combination that fully replaces it. The number one goal, Epstein argues, has to be keeping that strait open — everything else is a stopgap.
What Happens to Oil Prices If the Strait of Hormuz Closes?
The short answer: prices go dramatically higher, and they stay there until the strait reopens. The Strait of Hormuz is the single most important chokepoint in global energy. Twenty percent of the world's daily oil production flows through it. If that route is cut off or severely disrupted, there is simply no combination of alternatives that covers the loss.
02:15
Alex Epstein explains why 20 million barrels per day through the Strait of Hormuz cannot be replaced by any combination of alternatives
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Epstein is direct about this: "There is no replacement whatsoever for opening that strait and keeping it open." Every other option — the Strategic Petroleum Reserve, Saudi spare capacity, Canadian oil sands, increased US production — tops out somewhere between 1 and 6 million barrels per day combined, in the most optimistic scenario. That's still a fraction of 20 million. The result is sustained higher prices for oil, gas, and every product that depends on them, which is essentially everything.
Why Is the Strait of Hormuz So Important to Global Oil?
The strait is a narrow waterway between Iran and Oman, and it serves as the primary exit route for oil produced across the Persian Gulf — including Saudi Arabia, the UAE, Kuwait, Iraq, and Qatar. It's not that no alternatives exist, it's that the global energy infrastructure has been optimized over decades around this route. Pipelines, tanker fleets, port facilities — all of it is built around the assumption that the strait is open.
Iran's leverage here is enormous. Even if Iran can't threaten the United States or Israel in a direct military sense, it sits directly on top of a chokepoint that controls a massive share of the global economy. Epstein puts it clearly: this is the biggest damage Iran can realistically do — not missiles, but blocking oil.
08:40
Epstein breaks down Iran's drone threat — Shahed suicide drones launched from trucks with 500-mile range create a severe cost asymmetry problem for US defenses
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Making matters worse, Iran's arsenal for disrupting the strait has evolved. Beyond traditional mines and missile batteries, Iran now possesses Shahed suicide drones with roughly 500-mile range that can be launched from the back of a truck off a coastline. These low-cost, hard-to-intercept weapons create a severe cost asymmetry problem for any defensive response.
What Can the US Actually Do If Iran Blocks Oil Shipments?
Epstein lays out two primary paths and several secondary options:
Path 1: Win Quickly and Open the Strait
The cleanest solution is a swift military outcome that results in some form of Iranian capitulation, followed by a friendly or neutral government that allows free passage. Simple in concept, complex in execution — but schematically, it solves the problem directly.
Path 2: Secured Convoys with Allied Backing
If a quick resolution isn't possible, the US can lead high-security convoys through the strait with allied nations — Japan, South Korea, India, and potentially even China, which depends heavily on Gulf oil. The key elements are military deterrence, economic insurance for shipping companies and tanker operators, and targeted strikes on Iranian drone stockpiles and production facilities to reduce the threat asymmetry.
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The Strategic Petroleum Reserve discussion — why the US enters this crisis with 400 million barrels instead of the 700+ million it should hold
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The US government has floated a government-backed insurance program through its development finance corporation, but Epstein notes the funding level is likely insufficient and may require Congressional action.
Secondary Options (All Partial)
- Saudi/UAE spare capacity: Estimates of 1–3 million barrels per day, but requires transport routes that also depend on the strait.
- US Strategic Petroleum Reserve: About 4 million barrels per day maximum throughput, with roughly 400 million barrels in reserve.
- International Energy Agency reserves: Member nations hold about 1.4 billion barrels combined that could be released.
- Canadian oil sands: A medium-term opportunity, not an immediate fix.
- Jones Act suspension: Would allow more efficient domestic maritime oil transport, particularly beneficial for California.
Combined, these options might cover 6–10 million barrels per day in a best-case scenario. Still half of what the strait handles on a normal day.
How Much Oil Is in the US Strategic Petroleum Reserve?
The US Strategic Petroleum Reserve (SPR) currently holds approximately 400 million barrels, with a maximum release rate of about 4 million barrels per day. At that rate, it provides roughly 100 days of output — but the SPR is not meant to replace total US demand, only to cushion supply shocks.
The reserve should hold over 700 million barrels. It doesn't, because the Biden administration drew it down significantly to suppress gasoline prices ahead of midterm elections — a decision Epstein calls "unequivocally a mistake." The optimal time to refill strategic reserves is when oil is cheap, and that window was not used. Now the US enters a supply crisis with less cushion than it should have.
The International Energy Agency coordinates a broader allied reserve program. Member nations collectively hold about 1.4 billion barrels, though as of the time of this conversation, they had not agreed to release reserves because they had not formally declared an emergency.
Could Canada Replace Lost Middle East Oil Imports?
Canada is Epstein's most interesting near-term opportunity — and the most underutilized. Canada has massive oil sands deposits, a friendly relationship with the US, a highly educated workforce, and enormous natural resources across the board. It produces about one-third the oil its reserves would suggest it could, partly due to its own poor policy decisions and partly due to US policy failures like the cancellation of the Keystone XL pipeline.
Canadian oil sands produce heavy crude, which is exactly what US Gulf Coast refineries are designed to process. This is not a theoretical match — it's a natural one. The problem is infrastructure. Without pipelines, you're limited to rail transport, which is slower and more expensive but still meaningful. Epstein believes a focused US-Canada energy task force could add a few hundred thousand barrels per day in the near term through rail alone.
"Canada has no people and infinite resources and is really friendly," Epstein says. "We should be the US-Canada superpower. We're sleeping on it."
What Is the Jones Act and Does It Make Oil More Expensive?
The Jones Act is a set of federal shipping restrictions requiring that goods transported between US ports be carried on vessels that are American-built, American-owned, and American-crewed. The intent was to protect the domestic shipbuilding industry. The result, according to Epstein, has been inefficiency and higher costs — particularly for coastal states like California that rely on maritime oil transport.
Suspending the Jones Act during an oil crisis would allow more efficient foreign-flagged tankers to move oil between US ports, reducing domestic price pressure. Epstein goes further — he'd prefer to eliminate it entirely, arguing it has failed to meaningfully strengthen American shipbuilding while consistently raising costs for consumers.
Powerful industry lobbies will fight any Jones Act reform, but in a supply crisis, even a temporary suspension could provide meaningful relief at the margins.
Can Venezuela Actually Replace Lost Oil Supply?
No. Epstein is emphatic about this. Venezuela currently produces under 1 million barrels per day. Even in the most optimistic scenario, getting Venezuela to 2 million barrels per day would take years and massive investment under conditions that remain deeply hostile to foreign oil companies. Venezuela's oil infrastructure has been badly degraded under Chavez and Maduro.
"Venezuela is essentially useless right now," Epstein says. The political appeal of Venezuela — it's close, it produces heavy crude, it's not the Middle East — doesn't survive contact with the reality of what it would take to actually increase production there. It's not a bad idea, it's just not an idea at all in any near-term context.
The Bottom Line on the Oil Crisis
The hierarchy of solutions is straightforward, even if the execution is not. Open the Strait of Hormuz — that's the only real fix. Everything else buys time. Saudi and allied spare capacity, strategic reserve releases, Canadian rail transport, Jones Act reform, and increased US production are all meaningful at the margins, but none of them replaces 20 million barrels a day. The worst ideas — banning US oil exports or manipulating futures markets — would actively make things worse by destroying the price signals that incentivize more production.
Oil is, as Epstein repeatedly emphasizes, the most energy-dense and portable fuel source the global economy has. Mobility runs on oil. Trade runs on oil. A prolonged Strait of Hormuz closure doesn't just mean higher gas prices — it means a significantly poorer world. Getting that strait open, by whatever means necessary, is the only option that actually matters.
