In a significant escalation of tensions in the Middle East, Iran’s parliament has approved a proposal to close the Strait of Hormuz, a vital waterway for global oil shipments.
Gatekeepers News reports that the decision comes in response to recent US-led airstrikes targeting Iranian nuclear facilities.
According to analysts, the closure of the Strait of Hormuz could lead to a surge in crude oil prices to above $120 per barrel, potentially even reaching $150 per barrel. This would have far-reaching implications for global inflation, economic growth, and energy security.
The Strait of Hormuz is a narrow passage connecting the Persian Gulf to the Arabian Sea, handling around 20% of the world’s oil and 20% of global liquefied natural gas (LNG) trade. Any disruption to shipping through the strait would have significant consequences for global energy markets.
“As markets reopen on Monday, investors are bracing for sharp volatility, with crude oil prices expected to surge and inflation forecasts now under intense scrutiny,” said Nigel Green, CEO of deVere Group.
The closure of the Strait of Hormuz would not only affect oil prices but also disrupt global supply chains, leading to increased shipping costs and delays. Countries heavily reliant on oil imports, such as India, China, Japan, and South Korea, would be particularly vulnerable.
According to the US Energy Information Administration (EIA), 84% of crude oil and condensate exports passing through the Strait of Hormuz went to Asian markets in 2024, with India, China, Japan, and South Korea being the top destinations.
The international community is bracing for the potential consequences of this decision, with global oil prices and economic stability hanging in the balance.
