Iran announced a temporary blockade of the Strait of Hormuz on Tuesday, February 17, for live-fire exercises.
This rare show coincides with another significant round of nuclear talks with the US in Geneva.
The closure marks the first time Iran has announced the closure of the strategic chokepoint. About 20% of the global oil supply passes through the Strait of Hormuz.
Iranian media have not reported any specific timeline for the closure of the world’s most important oil passage.
However, “security and maritime concerns” were cited for closing the Strait of Hormuz.
Supreme Leader Ayatollah Khamenei issued stark warnings, saying: “The strongest army in the world can sometimes receive such a slap that it cannot get back on its feet.”
What does the closure of the Strait of Hormuz mean for oil prices?
The closure of the Strait of Hormuz could trigger an immediate and massive spike in oil prices, increasing them by 50% to 80%. With the shutdown, about 20 million barrels of daily oil supply cannot reach global markets. This move would ultimately disrupt supply, increase shipping costs and cause severe global economic shock.
