Iranian officials, including a key adviser to Supreme Leader Ali Khamenei and IRGC commander Esmail Kosari, have raised the prospect of closing the Strait of Hormuz, a critical maritime chokepoint through which roughly 20–30% of global oil and 20% of liquefied natural gas (LNG) transit. At the time of writing the Iranian Parliament has approved a measure to close the Strait of Hormuz. Here I explore the impact of this if put in place.
The Strait of Hormuz, located between Iran to the north and Oman and the United Arab Emirates to the south, is the world's most critical oil transit chokepoint. Spanning approximately 167 km in length and narrowing to 33 km at its tightest point, the strait's shipping lanes are just 3 km wide in each direction, making them vulnerable to disruption. According to the U.S. Energy Information Administration (EIA), about 20.9 million barrels per day (bpd) of oil and petroleum products, roughly 20–30% of global seaborne oil trade, passed through the strait in 2023 and early 2025. Additionally, it handles 20% of global LNG trade, primarily from Qatar, the world's second-largest LNG exporter. Major oil producers, including Saudi Arabia, the UAE, Kuwait, Iraq, and Iran itself, rely on the strait for exports, mainly to Asia, with China, India, and Japan as key markets. Beyond energy, the strait is a vital route for container trade, with transshipment hubs like Jebel Ali and Khor Fakkan serving global shipping networks.
Iran's threats to close the Strait of Hormuz, reiterated on June 22, 2025, by Kosari and echoed by the Iranian parliament's vote to consider closure, stem from the U.S. strikes on its nuclear facilities and Israel's earlier attacks on June 13. These actions, which targeted Iran's nuclear program, ballistic missile capabilities, and military infrastructure, have weakened Tehran's conventional military capacity and heightened domestic pressure on the regime to respond forcefully. Supreme Leader Khamenei's promise of "irreparable damage" to the U.S. and Kosari's statement that closing the strait is "on the agenda" suggest a willingness to escalate asymmetrically. Blocking the strait would serve as a geopolitical "nuclear option," leveraging Iran's geographic control over the waterway to inflict economic pain on adversaries and assert regional influence.
However, several factors temper the likelihood of a full closure. Iran's economy heavily relies on oil exports through the strait, which account for 65% of government revenue and 8% of GDP. Closing the strait would disrupt its own exports, primarily to China, which buys over 75% of Iran's 2.1 million bpd of crude and condensate exports. This could strain relations with Beijing, a critical ally, as China opposes disruptions that could spike oil prices. Additionally, Iran's recent efforts to improve ties with Gulf neighbours like Saudi Arabia, which also depend on the strait, make a blockade politically costly. Analysts, including Ellen Wald of Transversal Consulting, argue that there is "no net benefit" for Iran in closing the strait, as it would harm its allies more than its enemies.
Iran possesses the military capabilities to disrupt the strait, though a complete and sustained closure is challenging. The Islamic Revolutionary Guard Corps (IRGC) and Iranian Navy have amassed cruise and ballistic missiles, kamikaze drones, naval mines, fast attack boats, and midget submarines suited for operations in the strait's narrow waters. Naval mines, deployable by IRGC speedboats or commercial vessels, pose an immediate threat, as clearing mines is arduous and risky. Shore-launched anti-ship missiles and drones could target tankers or infrastructure, while swarm tactics could overwhelm larger vessels. In 2019, Iran demonstrated its ability to disrupt shipping by attacking tankers off Fujairah, and in April 2024, it seized a container ship near the strait. These incidents suggest Iran could harass or partially disrupt traffic.
However, Israel's strikes since June 13, 2025, have targeted Iran's ballistic missile capabilities and naval assets, potentially limiting its ability to sustain a blockade. The U.S. Fifth Fleet, based in Bahrain, and Combined Maritime Forces maintain a strong presence in the region, deterring a full closure. Analysts note that much of the strait lies in Omani or international waters, complicating Iran's ability to legally or physically block it entirely. A blockade would likely trigger a military response from the U.S., UK, and potentially NATO allies, as seen during the 1980s Tanker War, when the U.S. Navy escorted convoys under Operation Earnest Will.
Iran has threatened to close the Strait of Hormuz multiple times, in 2012 over sanctions, in 2019 after tanker attacks, and in 2024 following Israel's strike on its Damascus consulate, but has never followed through. During the 1980s Iran-Iraq War, both sides attacked tankers in the "Tanker War," but the strait remained open, with 411 ships attacked over eight years, mostly neutral tankers. Iran's restraint reflects its economic dependence on the strait and the risk of provoking a broader conflict. A full closure would be a "last resort," likely requiring direct U.S.-Iran military engagement or an existential threat to the regime. Current tensions, while severe, may not yet meet this threshold, as Iran may prefer to downplay the U.S. strikes and pursue nuclear negotiations to ease sanctions.
The likelihood of Iran attempting to block the Strait of Hormuz is low to moderate but rising due to recent escalations. Several factors influence this assessment:
Motivation vs. Cost: Iran's desire to retaliate is strong, but closing the strait risks economic self-harm and alienating allies like China and Gulf states. It may opt for limited disruptions, such as seizing vessels or targeting Israeli-linked ships, as seen in April 2024.
Weakened Capabilities: Israel's strikes have degraded Iran's missile and naval assets, potentially limiting its ability to sustain a blockade against U.S. and allied naval forces.
Deterrence: The U.S. Fifth Fleet and international naval presence, combined with the threat of severe retaliation, deter a full closure.
Domestic Pressure: Iran's leadership faces internal pressure to respond but must balance this against economic stability and regime survival.
A Polymarket estimate on June 22, 2025, placed 55% odds on Iran shutting the strait, reflecting heightened market concern but not definitive evidence. Iran is more likely to engage other actions, such as missile tests, cyberattacks, or vessel seizures, than a full blockade, which would be a high-risk gamble.
A partial or full closure of the Strait of Hormuz would have profound impacts on global trade, particularly energy markets. The strait handles 20.9 million bpd of oil (20–30% of global seaborne trade) and 20% of global LNG. A significant disruption, defined as blocking 4–6 million bpd for weeks, could eliminate OPEC+'s spare capacity of 5.7 million bpd, primarily from Saudi Arabia and the UAE. Goldman Sachs estimates a prolonged closure could push Brent crude prices above $100 per barrel, with some analysts warning of $150+ if supply is severely curtailed. This would spike global energy prices, increase shipping and insurance costs, and disrupt supply chains. Europe, reliant on Qatari LNG, and Asia, importing 70% of the strait's oil, would face energy shortages, inflating costs for manufacturing, transport, and agriculture.
Alternative routes are limited. Saudi Arabia's East-West pipeline (5 million bpd) and the UAE's Fujairah pipeline (1.8 million bpd) can bypass the strait but cover only a fraction of the 20 million bpd transiting daily. These routes are also vulnerable to attacks, such as Houthi strikes on Red Sea infrastructure. A closure would also threaten Middle Eastern food security, as the region imports grains, oilseeds, and sugar through the strait, representing 4.2% of global seaborne agricultural trade.
Beyond energy, the strait is a key route for container trade, with hubs like Dubai facilitating global shipping networks. A blockade would increase freight rates, as seen in a 24% surge in tanker rates to China on June 17, 2025, and raise marine insurance premiums, impacting imported goods prices. Countries like India and Bangladesh, reliant on Gulf oil, would face higher commodity costs, contributing to inflation. A prolonged closure could trigger a global economic downturn, with market volatility affecting stock exchanges and currencies.
A blockade would likely provoke a military response from the U.S., UK, and potentially NATO allies, risking a broader regional conflict. The U.S. has bolstered its presence in the region, with the Bataan Amphibious Readiness Group deployed to deter Iran. Such a conflict could involve Gulf states, escalating tensions and threatening regional stability. The UN Security Council, despite divisions (e.g., China and Russia's leniency toward Iran), would likely impose sanctions, further isolating Tehran.
Potential Scenarios:
1.Limited Disruption: Iran may conduct targeted attacks, such as seizing Israeli-linked vessels or deploying mines selectively, to signal defiance without a full closure. This would raise oil prices by 7–13%, as seen after Israel's June 13 strikes, and increase shipping costs but avoid a global crisis.
2.Full Blockade: A complete closure, though unlikely, would involve sustained mining, missile attacks, and drone strikes, halting most traffic. This could push oil prices to $150+, disrupt LNG and container trade, and trigger a global recession. Military escalation would be near-certain.
3.No Action: Iran may refrain from blocking the strait, focusing on diplomatic protests or cyberattacks to avoid self-inflicted economic damage and military retaliation. This would limit trade disruptions but maintain market volatility.
The likelihood of Iran fully blocking the Strait of Hormuz is low to moderate due to economic self-interest, weakened military capabilities, and international deterrence. However, limited disruptions, such as vessel seizures or targeted attacks, are more plausible given Iran's need to respond to U.S. and Israeli strikes. A full closure would devastate global trade, spiking oil prices to $100–$150 per barrel, disrupting LNG and container flows, and threatening Middle Eastern food security. Even a partial blockade would increase freight and insurance costs, fuelling inflation in import-dependent nations like India and Bangladesh.
https://michaeltsnyder.substack.com/p/closing-the-strait-of-hormuz-will
"Our way of life depends on cheap energy. If you remove cheap energy from the equation, our society will be thrown into a state of chaos. The Iranians know that closing the Strait of Hormuz is one of the most powerful forms of leverage that they possess, because the world is deeply dependent on the oil that travels through that waterway. We don't know exactly how this crisis will play out, because the Strait of Hormuz has never been closed in modern times. But as I pointed out earlier this month, we were warned that Israel would attack Iran, the global price of oil would rise, and the increase in the price of oil would be blamed on Israel. And that is precisely what has happened. Israel has attacked Iran, the global price of oil has been increasing, and many are blaming Israel for what has transpired. Unfortunately, the truth is that this crisis is just getting started.
On Sunday, it was being reported that the Iranian Parliament "has approved a measure to close the Strait of Hormuz"…
The Iranian Parliament has approved a measure to close the Strait of Hormuz, a critical global oil choke point, after the United States bombed three nuclear sites in Iran, according to Iranian state media on Sunday.
While the Parliament has voted in favor of closing the strait, the final decision rests with the country's Supreme National Security Council, according to state media.
Of course the Iranian Parliament never would have held this vote if the Supreme National Security Council had not already decided what it was going to do.
At a time when the regime is under threat, there is no way that we are going to be shown any signs of disunity among Iranian leaders.
So what does this mean?
It means that the price of oil is going to go higher.
A lot higher.
JPMorgan is projecting that we could see the price of oil hit $130 a barrel in a "worst-case scenario"…
Investors predict a "knee-jerk" reaction, with oil prices expected to spike due to fears of disrupted Middle East supplies. Brent crude, already up 20% over the past month to $79.04, could climb toward $130 per barrel in a worst-case scenario, according to JPMorgan.
I agree that we could see the price of oil soon hit $130 a barrel.
But if the Strait of Hormuz stays closed for an extended period of time, it will go a lot higher than that.
In a previous article, I warned that if the price of oil rises above $100 a barrel and stays there, it will immediately push the global economy into a recession.
And I also warned that if the price of oil rises above $200 a barrel and stays there, it will immediately push the global economy into a depression.
Yes, we really are facing a worldwide economic depression if this crisis is not resolved.
Because of how narrow it is, the Iranians can shut down the Strait of Hormuz quite easily…
The strait connecting the Gulf of Oman with the Persian Gulf is one of the world's most critical chokepoints — just 20 miles wide at its narrowest point.
Shipping lanes in the strait — the area that is deep enough for ships to pass — are even narrower at less than two miles wide in each direction, making them much more vulnerable to attacks and threats of closure.
The Iranians have been planning for such a scenario for many years, and they definitely have the resources to pull it off.
The reason why the Strait of Hormuz is so important is because approximately 20 percent of all global oil production travels through it…
About 20% of global oil and gas flow through the strait, which lies between Oman and Iran, and its closure could mean rising fuel prices for American consumers.
How will the world economy function when most oil exports from the Middle East are suddenly cut off?
That is a very good question.
It is being projected that economies in Asia will be hit the hardest…
The bulk of all oil exported by the regional petro giants, Iran, Iraq, Kuwait, Qatar, Saudi Arabia and the UAE, all travel through this narrow waterway.
Asia is likely to bear the brunt most from any closures to the waterway, with China, India, Japan and South Korea all getting most of their oil imports through the strait.
Thankfully, the U.S. has become a lot less dependent on foreign oil in recent years.
At this point we purchase "less than 3 percent of the oil coming out of the Persian Gulf"…
By contrast, the United States buys less than 3 percent of the oil coming out of the Persian Gulf, notably from northern Saudi Arabia. The United States became an overall net exporter of oil in 2020 as fracking technologies enabled a big increase in domestic oil production.
But ultimately everyone will be affected because oil is a global commodity.
It will be fascinating to see how this crisis plays out. Even before the Iranian Parliament voted, one oil tanker in the Strait of Hormuz suddenly reversed course once news broke that the U.S. had bombed Iran…
I don't know if I even have the words to describe how serious this crisis could become.
U.S. Secretary of State Marco Rubio is urging China to convince Iran to keep the Strait of Hormuz open…
U.S. Secretary of State Marco Rubio on Sunday called for China to prevent Iran from closing the Strait of Hormuz, one of the most important trade routes for crude oil in the world.
"I encourage the Chinese government in Beijing to call them about that, because they heavily depend on the Straits of Hormuz for their oil," Rubio said in an interview on Fox News. China is Iran's most important oil customer and maintains friendly relations with the Islamic Republic.
And he is also warning that the U.S. military could get involved if the Iranians really do shut it down…
US Secretary of State Marco Rubio called it a "suicide mission," adding it would be a massive escalation that would merit a response from the US and others.
He said: "If they do that, it will be another terrible mistake. It's economic suicide for them if they do it.
"And we retain options to deal with that, but other countries should be looking at that as well. It would hurt other countries' economies a lot worse than ours."
Of course it would not be easy for the U.S. or any other major power to conduct an operation to reopen the Strait of Hormuz.
Any ships that enter the Strait of Hormuz would be sitting ducks for the Iranian missile launchers that have been dug deep into the cliffs that overlook the waterway.
Let me add another layer to all of this.
A tremendous amount of fertilizer also travels through the Strait of Hormuz, and that has very serious implications. The following comes from a Zero Hedge article entitled "Global Fertilizer Market Thrown In Chaos After Mideast War Shutters Iran Urea Production"…
"Iran was the third-largest urea exporter in 2024, according to StoneX, with export volumes of around 4.5 million tons – about the size of China's. The country has a production capacity of around 8.9 million tons a year, Milam added, serving markets in Turkey, Brazil and Argentina, among others. It is also an exporter of ammonia."
"In addition to knocking Iranian urea production offline, the attacks also brought Egypt's operations to a standstill," Ward reported. "Israel reduced its natural gas flows to the country on Friday, prompting Egypt to cease production."
AgWeb's Margy Eckelkamp reported that "Linville's colleague at StoneX, Arlan Suderman, details why this conflict is being watched so carefully if the concern isn't in those two countries' production. 'There's a lot of other producers of fertilizer in the Middle East and a lot of it also passes through the Strait of Hormuz, which will be at risk going forward now,' Suderman says. From a global supply standpoint, Suderman also points out the Ukrainian attack of one of Russia's largest nitrogen fertilizer plants two weeks ago."
Global fertilizer production was already being squeezed in a number of different ways even before Iran was attacked.
If fertilizer exports are not allowed to travel through the Strait of Hormuz, that could trigger famines in many areas of the planet.
Needless to say, famine is another one of the major themes that we have been anticipating."