Iran’s supreme leader warned on February 1 that if his country was attacked by the United States, a full closure of the Strait of Hormuz is within its power.
And now that the attack has come?
It would be an extreme step that Iran has never taken, but it remains a nightmare scenario for global energy and financial markets.
The Strait of Hormuz is the chokepoint for bulk of the Persian Gulf’s exports of crude, and also refined fuels like diesel and jet fuel. OPEC members Saudi Arabia and the United Arab Emirates have some ability to reroute their shipments via pipelines that avoid Hormuz, a closing the strait would still cause a massive disruption to exports and spike crude prices. Qatar, the third-biggest exporter of liquefied natural gas in the world, relies on the strait. About a fifth of the world’s oil passes through the Strait of Hormuz.
In past arracks, Iran has made retaliatory strikes on some of its neighbors’ energy assets. In 2019, Saudi Arabia blamed Tehran for a drone attack on its Abqaiq oil processing facility that halted production equivalent to about 7% of global crude supply.
Many observers say it’s improbable that Iran could keep Hormuz closed for long, making lower-impact actions like harassment of shipping more likely. During last year’s war with Israel and the U.S., nearly 1,000 vessels a day were having their GPS signals jammed near Iran’s coast, contributing to one tanker collision. Sea mines are another long-threatened option for deterring shipping.
Tehran would have to weigh any retaliatory attacks on regional energy infrastructure against the likelihood that it would upset Beijing. China is the biggest buyer of Gulf crude that’s used its veto power at the UN Security Council to shield Iran from Western-led sanctions or resolutions.
Oil surged the most in more than three years during the June 2025 war, with Brent crude rising above $80 a barrel in London. However, the gains quickly faded once it became clear that key regional oil infrastructure hadn’t been damaged.
Since then, concerns about an oversupply have dominated global markets, with crude in London ending 2025 about 18% lower than where it started. Despite fears of a glut, more recently prices have surged, gaining 19% in 2026, partly due to fears of U.S. strikes on Iran.
Oil prices tend to rise about 4% in response to a 1% reduction in supply, according to an analysis of historical events by Ziad Daoud, chief emerging market economist at Bloomberg.
The odds that Iran would take the risk of damaging its relations with China and close the Strait of Hormuz go up as its military posture deteriorates. At some point the Iranian leadership may feel the situation is so dire that closing the Strait of Hormuz becomes a viable last resort move.
Photo by Zhao Chen on Unsplash
