The energy crisis has only just begun

For every day the war in the Middle East drags on, the crisis in energy markets deepens. The price of everything from gas and oil to jet fuel and plastics is rising sharply.

That crisis is set to get dramatically worse over the next week or two.

Energy shipments stopped in their tracks on February 28 when the war began and Iran effectively closed the Strait of Hormuz. But plenty of ships made it out to sea in those final days before the conflict began. The last of them should arrive in Japanese and Korean ports sometime over the next 8-10 days.

After that, there's nothing coming.

"You have this massive air pocket. At this stage, we're looking at probably somewhere around a half a billion barrels of what would normally be flowing out of Hormuz that has now not been flowing," said Rory Johnston, founder of Commodity Context.

In the oil industry there's a difference between what people call paper oil and physical oil.

Right now there's a shortage in paper oil, which are contracts. It represents oil that can be shipped, as opposed to being an actual barrel travelling on a ship.

But as soon as the actual, final shipments of oil out of the Strait arrive at their destinations, the shortage moves from the paper world into the real, physical world.

When that happens there will be a lack of tangible oil to actually power things.

Governments around the world have agreed to release 400 million barrels of oil from strategic reserves. The United States has waived some sanctions on refiners in Iran and Russia to help deal with the supply shock.

Japan's vice minister for international affairs, Takehiko Matsuo has said that's still not nearly enough to fix supply issues.

He told Reuters that Japan has roughly three weeks of gas in storage.

Meanwhile, natural gas futures prices — contracts that reflect what traders expect gas to cost in the weeks and months ahead — have soared even more than oil since the war started. Asian benchmark JKM futures are up 90 per cent.

"The volumes of gas unable to transit through the Strait of Hormuz are huge: around 120 billion cubic metres," said Bridget Payne, head of energy forecasting at Oxford Economics, a global economic research firm.