The latest developments in global energy markets

The ongoing war in the Middle East has resulted in the Strait of Hormuz being effectively closed. The Strait of Hormuz is a critical passageway for the global oil market, around one fifth of global oil supplies transit the strait each day, and few alternative export routes exist. A prolonged halt to shipments through the strait would therefore pose a significant risk to global supply.

The International Energy Agency (IEA) describes the closure of the strait of Hormuz as the most significant supply disruption in the history of the global oil market. The severity of the disruption will largely depend on how long the shutdown of shipments through the Strait of Hormuz continues.

Impact for security of supply in Sweden

Most of the crude oil and oil products leaving the Strait of Hormuz are destined for Asia. As a result, the short‑term impact on Swedish and European buyers is expected to be higher prices rather than supply shortages, driven by geopolitical uncertainty and intensified competition for available cargoes. At present there is no indication of an immediate risk of physical shortages in Sweden. The Swedish Energy Agency is in ongoing contact with other authorities and industry representatives to coordinate and update the situational assessment of Sweden’s energy and fuel supply preparedness.

Emergency reserves

In response to the severe disruption caused by the effective closure of the Strait of Hormuz, the International Energy Agency (IEA) on 10 March proposed a collective release of 400 million barrels of oil from emergency reserves, a measure that was approved by all member countries on 11 March.

The Swedish Energy Agency holds significant responsibility for Sweden’s emergency reserves of oil and fuel. Its key duties include determining storage obligations, exercising oversight, and ensuring that the Swedish Government can fulfils its international commitments.

Stock releases are not carried out in response to high fuel prices alone, but rather when there is an interruption, shortage or a credible risk of one arising. Ultimately, it is the Swedish Government that decides upon a release of the Swedish national reserves.