The Strait of Hormuz is drawing global attention as the United States and Israel launched a joint attack on Iran on Saturday (local time), prompting Iran to mount an immediate large-scale counterattack. The strait serves as a critical terminal for global oil and gas shipments, and its closure by Iran could trigger a surge in worldwide energy prices.
According to Bloomberg, Iran's Supreme Leader stated on the 1st that Iran could blockade the Strait of Hormuz if attacked by the United States. Bloomberg noted that "while a Hormuz blockade would be an extreme measure Iran has never taken, it represents a nightmare scenario for global markets" that "would cause major disruptions to exports and spike crude oil prices."
The Strait of Hormuz, located within Iranian territory, is a vital shipping lane that transports approximately 25% of the world's crude oil from major suppliers including Saudi Arabia and Iraq. The strait also serves as a strategic chokepoint for crude exports and refined petroleum products such as diesel from the Persian Gulf region. Qatar, the world's third-largest liquefied natural gas (LNG) exporter, must also transit through the Strait of Hormuz.
Iran itself is the third-largest oil producer among OPEC members, alongside the United Arab Emirates, behind only Saudi Arabia and Iraq. Despite U.S. sanctions imposed on Iran's trading partners since 2020, Iran has increased production from 2 million barrels per day to 3.3 million barrels. Approximately 90% of this output goes to China, defying U.S. restrictions. However, refineries and processing facilities handling oil destined for China would also become inaccessible if the strait were blockaded. Bloomberg noted that Iran must consider the possibility of antagonizing China if it closes the Strait of Hormuz.
Saturday's attack occurred when oil markets were closed, resulting in no immediate market impact. However, signs emerged that countries accelerated shipments in February, apparently anticipating a potential blockade. Saudi Arabia loaded 7.3 million barrels per day on the 24th—its highest volume in three years—while Iraq, Kuwait, and the UAE increased shipments by 600,000 barrels compared to January.
Sources suggested Iran is more likely to disrupt shipping operations than impose a prolonged blockade on Hormuz. When the U.S. and Israel attacked Iran last June, an average of 1,000 vessels per day experienced GPS signal interference near Iranian waters, causing tanker collisions. Oil prices at the time recorded their largest increase in three years, pushing Brent crude above $80 per barrel in London. This year, crude prices have already risen 19% from previous levels amid growing expectations of a U.S. attack on Iran.
Global investment banks including JP Morgan and economic research institutes estimate that a full blockade of the Strait of Hormuz combined with escalating military conflict could push international oil prices beyond $120-130 per barrel—more than 70% above current levels of around $70 per barrel. Ziad Daoud, chief economist at Bloomberg Economics, analyzed that "historical price movements show oil prices tend to rise 4% for every 1% decrease in supply."