Iran’s parliament has formally approved a measure authorizing the potential closure of the Strait of Hormuz, a strategic maritime corridor critical to global oil and gas trade. This dramatic move follows U.S.-led airstrikes targeting key Iranian nuclear sites, sharply escalating tensions across the Middle East and sparking fears of an impending energy crisis.

If implemented, the closure could trigger the most severe supply shock in over a decade, pushing oil prices from below $80 per barrel to as high as $150, and unleashing ripple effects across international markets, energy-dependent economies, and shipping routes.

Why the Strait of Hormuz Matters

The Strait of Hormuz is a narrow waterway that connects the Persian Gulf to the Arabian Sea and beyond. It serves as the primary exit route for petroleum exports from some of the world’s largest producers, including Saudi Arabia, Iraq, the United Arab Emirates, Qatar, Kuwait, and Iran itself. On average, about 20% of the global oil supply and a similar share of liquefied natural gas (LNG) flow through the strait daily.

Any disruption to traffic along this channel would choke global energy supplies, spike shipping insurance premiums, and cause logistical backlogs in oil delivery. The region has long been viewed as a geopolitical flashpoint, and Iran has frequently threatened to close the strait in response to perceived acts of aggression or international sanctions. Until now, however, such threats had never materialized into official legislative action.

A Response to Military Strikes

Iran’s decision to pursue this closure was sparked by a coordinated military operation launched earlier this month by the United States, which struck multiple Iranian nuclear facilities. The airstrikes, aimed at sites such as Fordow, Isfahan, and Natanz, were described by U.S. officials as preventive measures to halt Iran’s advancing nuclear capabilities.

In response, Iranian lawmakers swiftly passed legislation allowing the government to shut down the strait if deemed necessary for national security. While the final decision rests with Iran’s Supreme National Security Council, the parliamentary green light signals a serious shift from rhetorical threats to tangible preparations.

Officials in Tehran warned that any further incursions into their territory would be met with “unmatched resistance” and “strategic retaliation,” with the Strait of Hormuz emerging as a central piece in Iran’s retaliatory calculus.

Global Oil Prices Set to Soar

Financial analysts have wasted no time issuing stark warnings. If Iran moves forward with the closure, global crude prices could surge well past the $120 mark, with some predictions placing oil at $150 per barrel within days. That level would represent the most aggressive spike since the 2008 financial crisis and could unravel recent efforts to control inflation worldwide.

The energy markets already reacted to the tensions, with both Brent crude and West Texas Intermediate (WTI) climbing nearly 10% over the past week. Should maritime disruptions become reality, shipping firms would need to reroute tankers around the southern tip of Africa, adding weeks to delivery schedules and substantially increasing costs.

Fuel-dependent industries, such as aviation, transportation, and manufacturing, would likely see immediate cost hikes, while consumers worldwide would bear the brunt through higher prices at the pump and more expensive goods.

Asian Economies on High Alert

The consequences of a strait closure would be especially severe for Asian nations, many of which rely on Gulf oil for their energy needs. In 2024 alone, an estimated 84% of all crude oil and condensate shipped through the Strait of Hormuz was destined for Asia. India, China, Japan, and South Korea stand out as the most exposed, with few viable alternatives in the short term.

India, in particular, imports more than 80% of its oil, much of it through Hormuz. Any prolonged disruption could worsen the country’s trade deficit, pressure its currency, and add to inflationary strains already burdening consumers and small businesses.

China, although possessing some strategic petroleum reserves, would face challenges maintaining its current industrial output levels if shipments from the Gulf were halted. In response, officials from several Asian governments have initiated contingency planning and called for international dialogue to avert further escalation.

Military Risks and Strategic Calculations

From a tactical perspective, Iran does not need to fully seal off the strait to create chaos. The use of naval mines, missile deployments, drone attacks, or harassment of commercial tankers could be enough to scare away shipping companies and insurers, effectively halting the flow of oil without an official blockade.

However, such actions would invite a swift military response. The United States and allied nations maintain a permanent naval presence in the region, with fleets regularly patrolling the waters around the Gulf. Western officials have already stated that any effort to obstruct navigation would be met with direct intervention.

Despite the parliamentary approval, some experts believe Tehran may not follow through with a full closure. The economic risks to Iran itself are significant. Nearly all of the country’s own oil exports also move through the same waterway, and China—its largest customer—has expressed clear opposition to any measures that would disrupt trade. Analysts argue that Tehran may be leveraging the threat more as a negotiating tool than a definitive policy.

Inflation, Markets, and Economic Fallout

Should a closure occur, central banks across the world would face renewed inflationary pressure, potentially derailing ongoing economic recovery efforts. Rising fuel costs could prompt monetary tightening, stifling growth and reducing consumer spending.

Equity markets are already showing signs of nervousness. Energy stocks have rallied, but broader indices in the U.S., Europe, and Asia have dipped due to fears of prolonged instability. Currency markets, too, have felt the tremors, with oil-importing nations seeing their exchange rates come under pressure.

The shipping industry, which handles 90% of global trade by volume, would also feel the shockwaves. Freight rates could surge, and insurance costs for vessels crossing the Gulf are likely to skyrocket. Insurers have already flagged the region as a high-risk zone, which will add to operating costs for logistics providers and ultimately for consumers.

Iran’s History of Threats and Today’s Reality

Iran has made similar threats in the past, particularly during times of heightened tensions with the West. But until now, those threats remained theoretical. This time is different. The parliamentary vote lends legal and political weight to a course of action that, if taken, could redefine global energy dynamics.

Still, analysts caution that this could be a high-stakes game of brinkmanship. Iran may be attempting to pressure Western powers into scaling back military actions or lifting sanctions. The longer the standoff lasts, the more likely it becomes that miscalculation or provocation leads to irreversible consequences.

A Delicate Crossroads for Global Stability

In sum, the approval by Iran’s parliament to shut down the Strait of Hormuz represents a potential turning point in global geopolitics. With oil prices already on edge and military forces in the region on high alert, any misstep could ignite a full-blown crisis.

While the world waits to see if Tehran will act on its legislative mandate, energy markets, shipping routes, and national economies remain vulnerable to what could become one of the most impactful decisions in recent history.