Following a US strike on Iranian nuclear facilities, reports indicate that the Iranian parliament has approved closing the Strait of Hormuz in retaliation against its long-standing adversary, the United States. However, the final decision rests with Iran's Supreme Security Council and, ultimately, Supreme Leader Ayatollah Khamenei, according to a few other reports from Iran.
Despite the parliamentary approval, economic and political analysts largely believe Iran is unlikely to take this drastic step. Several factors weigh against such a move: Iran itself relies on the Strait of Hormuz for its oil exports, and key Iranian allies, like China and India (the world's second and third-largest crude oil consumers, respectively), also depend on the Strait for their oil imports.
In fact, US Secretary of State Marco Rubio has reportedly urged China to exert its influence to prevent the closure. Other major oil and gas producers, including Qatar, the UAE, Saudi Arabia, Kuwait, and Iraq, depend entirely on the Strait of Hormuz to transport their energy exports to global markets.
From a military standpoint, even if Iran were to attempt a full closure, the US Navy's 5th Fleet possesses the naval assets to likely render such a move unsustainable. Analysts suggest that Iran might instead opt for disruption rather than a complete blockade, a tactic it has employed in the past.
From a military standpoint, even if Iran were to attempt a full closure, the US Navy's 5th Fleet possesses the naval assets to likely render such a move unsustainable. Analysts suggest that Iran might instead opt for disruption rather than a complete blockade, a tactic it has employed in the past.
Iran has previously disrupted the Strait of Hormuz in 2011, 2012, and 2018 when its interests were challenged. Potential disruptive actions could include laying mines, interfering with tanker movements, seizing tankers for "inspections," or taking actions to drive up shipping costs and insurance premiums. Notably, past disruptions occurred when Iran was not under the same level of direct military threat from a regional power as it is today. Given the current circumstances, a full closure is considered unlikely by analysts.
The Strait of Hormuz is a critical chokepoint, with over 20% of the world's crude oil and one-third of the world's liquefied natural gas (LNG) flowing through it. Any significant disruption would inevitably lead to spikes in both oil and gas prices, which have already been steadily rising since Israel's airstrikes against Iran on June 13.
The Strait of Hormuz is a critical chokepoint, with over 20% of the world's crude oil and one-third of the world's liquefied natural gas (LNG) flowing through it. Any significant disruption would inevitably lead to spikes in both oil and gas prices, which have already been steadily rising since Israel's airstrikes against Iran on June 13.
A complete closure of the Strait would not only escalate the current conflict but also broaden its scope. Even Arab countries that rely on oil and gas revenues would be compelled to react, potentially condemning the Iranian actions, even if they have historically maintained ties with Iran.
The oil and gas markets, often influenced by sentiment rather than pure logic, are expected to reflect these geopolitical tensions and potential disruptions when they open for business on Monday, with corresponding price movements.
