Global markets are closely monitoring the Strait of Hormuz, a vital corridor for oil and liquefied natural gas (LNG), amid fears that a widening conflict between Israel and Iran could disrupt traffic through the narrow waterway.

The Strait of Hormuz is a narrow but critical sea route that approximately one-third of global oil trade, accounting for 17 million to 20 million barrels of crude oil and condensate, passes through daily.

Around 70 percent of oil volume goes to Asia via this route, with China, Japan, India, South Korea, Singapore, Thailand, Pakistan and the Philippines among the largest recipients, according to the International Energy Agency.

The route is also essential for LNG exports, especially from Qatar and the United Arab Emirates, which account for 20 percent of global LNG trade. Europe is a key destination for LNG that transits through Hormuz.

While Iran has previously threatened to close the strait in response to geopolitical tensions, it has yet to act on such threats. However, the prospect of a broader regional conflict following Israel’s air strikes on Iran has renewed concerns over possible supply disruptions and rising energy prices.

The UK Maritime Trade Operations (UKMTO) said on Wednesday that the rising tensions in the region could escalate the military activity in critical waterways and affect maritime transport, while the Baltic and International Maritime Council also warned that any attack could directly impact maritime transport.

‘Absolute nightmare’

Some analysts say that Iran has a lot at stake should they close the route, as almost all the country’s oil exports and a large portion of China’s oil imports comes through the Strait of Hormuz.

Arne Lohmann Rasmussen, chief analyst and head of research at Global Risk Management, said that the closure of the Strait of Hormuz would be an “absolute nightmare” for the oil market.

“If Iran blocks this narrow chokepoint, it could affect up to 20 percent of global oil flows,” he said. “A closure would likely send oil prices above $100.”

Following Israel’s attacks early Friday on Tehran, the Natanz nuclear facility in Isfahan, and cities including Lorestan and Kermanshah, oil prices surged more than 7 percent, hitting $73.58, a nearly five-month high.

Senior Iranian military officials, including Iran’s Revolutionary Guard Corps Commander-in-Chief Hossein Salami and Major General Mohammad Bagheri, were reportedly killed in the strikes.

Israel also reportedly struck residential areas in Tehran, resulting in numerous civilian deaths. Several nuclear scientists were also killed in the attack on the Natanz nuclear facility in Isfahan.