Iran Parliament Votes to Close Strait of Hormuz Amid Rising Gulf Tensions

Tensions in the Middle East have escalated following U.S. airstrikes on Iranian nuclear facilities, with Iran threatening to close the strategic Strait of Hormuz, a critical chokepoint through which about 20 million barrels of oil per day transit, representing roughly 20% of global petroleum consumption. While Iran's naval forces alone lack the capacity to enforce a full blockade, they may employ asymmetric warfare tactics such as swarms of small boats, anti-ship missiles, and drones to disrupt shipping, potentially provoking a wider conflict involving U.S. and Gulf state navies. This threat has already caused a significant risk premium on oil prices, pushing crude above $80 per barrel and risking spikes to $100 if disruptions occur, severely impacting Asian economies reliant on these imports, especially China. Meanwhile, Iran continues to defy sanctions through complex shadow supply chains enabling record-high crude exports to China, facilitated by ship-to-ship transfers, yuan-based financial transactions outside SWIFT, and domestic Chinese refineries that absorb discounted Iranian crude. Saudi Arabia, the largest oil exporter through the strait, along with Iraq, UAE, Kuwait, and Iran itself, depend heavily on the strait for their oil exports, while increased security concerns have led to shipping firms pausing transit and insurance costs soaring. Despite a tenuous ceasefire brokered by President Trump and signs of de-escalation, the Iranian threat to global oil supply chains remains volatile, with the potential for asymmetric attacks and further instability that could severely disrupt global energy markets.