Iran threatens Strait of Hormuz closure amid Israel conflict, risking global oil price surge
By isabelle // 2025-06-20
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  • Iran threatens to blockade the Strait of Hormuz, risking a global oil price surge.
  • The strait handles 20% of global oil and 30% of seaborne crude, making it critical for energy trade.
  • A blockade would trigger a supply shock, spiking inflation and disrupting economies worldwide.
  • Iran is unlikely to fully close the strait as it relies on it for 90% of its own oil exports.
  • Limited disruptions like naval harassment are more probable than a full shutdown, but markets remain on edge.
The world’s energy markets are bracing for turmoil as Iran escalates its threats to blockade the Strait of Hormuz, a vital maritime chokepoint responsible for 20% of global petroleum consumption, amid rising tensions with Israel and the U.S. Iranian officials, including Esmail Kosari of Parliament’s Security Commission, confirmed the regime is "seriously reviewing" a closure, a move that could send oil prices skyrocketing to $130 to $160 per barrel. Yet history suggests Tehran’s threats are more calculated brinkmanship than imminent action given the catastrophic economic consequences such a move could have for Iran itself.

The Strait’s strategic chokehold

The Strait of Hormuz, a narrow 21-mile passage between the Persian Gulf and the Gulf of Oman, is the lifeline of global energy trade. Every day, 20 million barrels of crude oil representing 30% of seaborne crude flow through its waters, alongside nearly 20% of the world’s liquefied natural gas (LNG) exports. For energy-dependent nations like Japan, the strait is a "matter of life and death," as former Chief Cabinet Secretary Yoshide Suga declared in 2019. A full blockade would trigger an immediate supply shock. Analysts estimate oil prices could double or even triple due to low demand elasticity. JP Morgan warns of crude hitting $130 per barrel, while Citigroup projects a spike to $90 per barrel. The economic fallout would ripple through inflation, currency markets, and central bank policies worldwide.

Why Iran is unlikely to act... for now

Despite fiery rhetoric, Iran has never fully closed the strait, even during the 1980s "Tanker War" with Iraq. The reasons are pragmatic: Blocking Hormuz would sever Iran’s own oil exports, crippling its economy. Over 90% of Iran’s crude shipments—its financial lifeline—pass through the strait to Asian markets. Moreover, Iran risks alienating Gulf neighbors like Saudi Arabia and the UAE, which rely on Hormuz for their exports. A 2023 China-brokered détente with Riyadh underscores Tehran’s preference for uneasy coexistence over outright confrontation. Even Ali Al-Shihabi, a Saudi analyst close to the royal court, emphasized the Kingdom’s opposition to escalating conflict, stating it "will not be a conduit in any fashion towards an attack on Iran." Alternative pipeline routes, such as Saudi Arabia’s East-West Pipeline or the UAE’s Abu Dhabi Crude Oil Pipeline, can only reroute 10 to 13% of Hormuz’s daily volumes, leaving global markets vulnerable. Both Israel and the U.S. have avoided actions that could provoke a full-scale Iranian retaliation. Israel’s strikes have conspicuously spared Iran’s Kharg Island oil terminal, a move echoing President Jimmy Carter’s 1979 decision not to bomb the facility over fears of global economic chaos. Similarly, the U.S. has distanced itself from direct involvement, with Secretary of State Marco Rubio calling Israel’s recent attacks "unilateral action." President Donald Trump has sent mixed signals, telling aides he approved attack plans but delayed them to pressure Iran on its nuclear program. Public opinion leans against intervention: A YouGov poll found only 16% of Americans support U.S. military involvement in the conflict. Iran’s threats, while alarming, follow a pattern of strategic posturing. The regime has consistently prioritized survival over ideological fervor. During the 1980s, Iran mined the strait but failed to fully blockade it. Today, the U.S. Navy’s minesweepers in Bahrain stand ready to counter such measures, though clearing the waterway would take weeks and could endanger sailors. While Iran’s threats are credible enough to rattle markets, a full Hormuz closure remains improbable. More likely are limited disruptions—naval harassment, temporary tanker seizures, or mine deployments—designed to raise costs without triggering all-out war. The world must respond with strategic clarity, not alarmism. The strait may never close, but its geopolitical significance demands unwavering attention and a commitment to safeguarding the global energy order from those who would weaponize it. Sources for this article include: Modernity.news NYTimes.com Bloomberg.com Newsweek.com
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