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Visualization Simulates Strait of Hormuz Closure Impact on Global Oil Trade
Key points
- Simulates Strait of Hormuz closure on global oil trade.
- Uses real oil trade data and an Eisenberg-Noe financial network model.
- Shows indirect impact on countries not directly receiving oil from Hormuz.
- Models sequential oil price increases as country reserves deplete.
Simulating Global Oil Trade Disruptions
A new visualization tool has been developed to simulate the impact of closing the Strait of Hormuz on global oil trade. This tool originated from a supply chain class at Columbia University and evolved into a full visualization and research paper.
The model uses mechanics similar to the Eisenberg-Noe financial network, where countries consume oil and are interconnected via bilateral trading. It tracks how shocks, such as a bottleneck at the Strait of Hormuz, propagate through this network, leading to the depletion of oil reserves.
Indirect Impacts and Price Dynamics
The simulation reveals how a crisis unfolds, showing that countries not directly receiving oil from the Strait of Hormuz can still experience rapid depletion of their reserves. This occurs because other countries react by increasing their safety oil stock, which drives up oil prices and makes stockouts more costly for everyone.
The model also provides insights into price dynamics, indicating that oil price increases are not immediate but follow sequentially as countries' reserves are depleted over time.
Technical Implementation and Data
The visualization is built with 600 lines of Flask and a JavaScript frontend. It was developed with LLM assistance, matching ground-truth data from the original numerical exercise of the paper. The underlying data for the simulation is based on UN Comtrade data, though sanctioned trade is not included in the model.
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Primary sources
arXiv 2607.17491Reporting from
A new visualization tool and accompanying paper simulate the effects of closing the Strait of Hormuz on global oil trade using real oil trade data. The model demonstrates how shocks propagate through the network, depleting oil reserves and affecting prices even for countries not directly reliant on the strait.