Jun 24, 2025, 5:17 PM
Jun 23, 2025, 9:03 AM

Iran's threat to close Strait of Hormuz could disrupt global oil supply

Highlights
  • The Strait of Hormuz is a crucial maritime route, facilitating the transport of about 20% of the world's petroleum.
  • Recent conflicts between Israel and Iran have led to heightened tensions and threats regarding the closure of the strait.
  • The potential closure poses risks for global oil prices and security, though expert analysis suggests any disruption would likely be temporary.
Story

Iran and Israel have been embroiled in escalating hostilities that have raised alarms about the potential for Iran to close the Strait of Hormuz, a critical maritime route for oil transport. The strait connects the Persian Gulf with the Gulf of Oman and the Arabian Sea, and it serves as the transit point for approximately 20% of global liquid petroleum. On the weekend, U.S. military forces targeted three locations in Iran, heightening fears of a broader conflict that could influence oil prices and affect the global economy. Although some experts predict significant price spikes if tensions escalate, analysts believe that any closure of the strait would not last long, primarily due to U.S. Navy intervention to ensure safe passage through this strategically important chokepoint. The imminent threats to oil supply stem from geopolitical tensions, particularly as Iran's parliament reportedly supported a motion to close the strait, pending final decisions from its Supreme National Security Council. However, further complicating matters, any attempt by Iran to disrupt the Strait of Hormuz would simultaneously undermine its own oil exports. Moreover, while closing the strait could momentarily increase oil prices, the availability of U.S. oil reserves might cushion the impact for U.S. consumers, who withdraw only a minor percentage of oil supplies through this route compared to other global players, notably China. Market analysts indicate that gas prices could spike, but the long-term effects of a closure would hinge significantly on military responses and global oil demand adjustments.

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