Following the United States and Israeli-led attack on Iran, and ongoing turbulence in the Middle East and beyond, the global energy market is feeling the strain. The Middle East is responsible for a significant proportion of global oil and gas production, viewed as a vital link between the East and the West.
In the United States, some states have come to rely more on Persian Gulf energy than others, meaning that certain regions are expected to be disproportionately affected by the unrest.
The Strait of Hormuz
The Strait of Hormuz is located between Oman and Iran, connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea. The strait has become one of the world’s main oil and gas corridors, with an average of 20 million barrels per day (bpd) of crude, or around 20% of the global petroleum liquids consumption, passing through the waters in 2024.
Flows through the Strait of Hormuz in 2024 and the first quarter of 2025 consisted of over one-quarter of global seaborne oil trade and roughly one-fifth of global oil and petroleum product consumption. Approximately one-fifth of global liquefied natural gas trade also traversed the strait in 2024, mainly from Qatar, according to the United States Energy Information Agency (EIA).
It is considered a chokepoint, as there are very few alternative options to the corridor for energy transportation. Most oil and gas products that transit the strait have no alternative methods of exiting the region, apart from some limited pipeline networks.
Strait of Hormuz Closure
The outbreak of conflict in the Middle East has resulted in the almost complete closure of the Strait of Hormuz, which has driven the price of a barrel of Brent crude oil by as much as $10, as prices rose to $82.37 as the conflict escalated.
On Monday March 3rd, an Iranian Revolutionary Guards senior official announced that the Strait of Hormuz was closed and that Iran would fire on any ship trying to pass, according to Iranian media reports. The move follows several years of threats by Iran to block the narrow waterway in retaliation for any attack on the country.
U.S. Reliance on the Persian Gulf
The Persian Gulf consists of Iran, Iraq, Kuwait, Saudi Arabia, Bahrain, Qatar, Oman, and the United Arab Emirates (UAE).
In 2024, an estimated 84% of the crude oil and condensate and 83% of the liquefied natural gas that transited the Strait of Hormuz went to Asian markets, primarily to China, India, Japan, and South Korea.
Meanwhile, the United States imported around 0.5 million bpd of crude and condensate from Persian Gulf countries, through the strait that same year, accounting for around 7% of total U.S. crude oil and condensate imports and 2% of U.S. petroleum liquids consumption.
U.S. energy imports from the region have been far lower in recent years owing to the surge in domestic production and an increase in energy imports from Canada. By contrast, in 2018, the U.S. imported approximately 1.5 million bpd of crude and condensate from the Persian Gulf, and in 2008, this figure was significantly higher, at 2.34 million bpd.
While this demonstrates that the United States has reduced its reliance on the Middle East region for its oil, this is not the case for every U.S. state.
The California Case
In 2019, Robert Rapier wrote that “California’s Oil Hypocrisy Presents a National Security Risk.” In his article, Rapier highlights California’s hypocrisy as the state condemned the use of fossil fuels and cut production while increasingly relying on oil and gas imports. He emphasized that California’s foreign oil imports had tripled in the 20 years up to 2019, in contrast to most U.S. states, which reduced their crude imports.
In 2024, of the foreign crude California imported, 21.26% came from Iraq, 5.31% came from Saudi Arabia, and 4.42% from the UAE, demonstrating the state’s ongoing reliance on Persian Gulf energy.
While the U.S. Gulf Coast is connected to the Permian Basin and Canada via a complex network of crude pipelines, California does not have the same connectivity. In fact, there are no crude oil pipelines linking the Permian or midcontinent to the West Coast.
This means that California depends on either local production, crude shipped from Alaska, or oil that is transported internationally by tanker. This dependency on imports makes California’s energy sector disproportionately vulnerable to geopolitical instability.
In addition, California’s refining system is equipped to deal with the characteristics of the crude delivered by its largest oil importers, meaning crude coming from the Middle East and Latin America. This means that West Coast refiners are not well-prepared to manage light, sweet shale oil from the Permian Basin.
Meanwhile, Texas and Midwest refiners that import energy from the Persian Gulf can turn to alternative suppliers as necessary, whose crude flows they are equipped to process.
So, while many other countries are likely to feel the strain from the Strait of Hormuz closure than the United States – in terms of crude supplies – California may be hit hard.
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