Hormuz Closure Threat Pushes Oil Toward $150

Global oil markets are bracing for a historic spike in prices as Iran’s parliament on Sunday approved a bill authorizing the closure of the Strait of Hormuz, one of the world’s most vital oil transit chokepoints.

The move, which still requires ratification by Iran’s Supreme National Security Council, comes amid heightened tensions following reported U.S. airstrikes on Iran’s nuclear facilities.

If implemented, the closure could cripple the flow of nearly 20 percent of the world’s daily oil supply, with analysts warning that crude prices may soar above $150 per barrel, threatening to ignite a new wave of global inflation.

The Strait of Hormuz, a narrow maritime passage between the Persian Gulf and the Arabian Sea, is a key artery for global energy markets. An estimated 17 to 20 million barrels of crude oil and a quarter of the world’s liquified natural gas (LNG) are shipped through the strait every day.

By approving the legislation to block oil tankers from passing through the strait, Iran is seeking to exert maximum pressure in response to growing geopolitical confrontations, particularly with the United States. According to Iranian lawmakers, the bill also directs the government to prevent the passage of U.S.-bound oil shipments and intensify military oversight in the Gulf.

“This is a legitimate and strategic response to foreign aggression,” said Mohammad Reza Aref, a member of Iran’s parliament. “Iran cannot sit back while its sovereignty and energy infrastructure are targeted.”

Brent crude has already risen to $81.40 per barrel, its highest in five months, while U.S. West Texas Intermediate hovered around $78, reflecting growing unease in the market. Analysts warn that should Iran proceed with a complete blockade, oil prices could skyrocket to between $120 and $150, with some worst-case projections even higher.

Goldman Sachs forecast Brent could “easily” exceed $100 per barrel with even partial disruption. The International Monetary Fund (IMF) warned the crisis could severely disrupt global growth, especially in energy-importing economies.

“A full shutdown of the Strait would not only spark panic in the energy market but would also inject volatility into the broader global economy,” the IMF’s managing director, Kristalina Georgieva, said on Monday.

The United States swiftly condemned the parliamentary decision, calling it a “suicidal move” that would harm both Iran’s economy and the stability of international energy markets. Senator Marco Rubio stated, “Iran will be held accountable if it weaponizes global energy security. We are in close talks with allies to maintain freedom of navigation in the Gulf.”

Western military assets, including U.S. and British naval vessels, are reportedly on high alert in the Persian Gulf to prevent any disruption of maritime traffic.

The potential closure of the strait has already sparked concerns across industries. Oil shipping insurers are raising premiums for routes near the Gulf. In Australia, petrol prices could rise by 70 cents per litre, pushing prices to record levels. In the UK, analysts warn energy bills could triple to over £4,500 per year for some households if both oil and gas flows are affected.

Developing countries, heavily reliant on energy imports, may face balance-of-payment pressures, leading to inflation spikes and potential currency instability.

Analysts caution that while Iran’s parliament has approved the motion, a complete closure is unlikely without final approval from Supreme Leader Ayatollah Ali Khamenei. Previous threats to block the strait have not materialized into full-scale actions due to the immense economic and military risks involved.

“Iran closing the Strait of Hormuz would be an act of desperation. It would invite direct confrontation,” said Middle East energy analyst Helima Croft. However, the signal from Tehran has already rattled the markets and served as a reminder of the region’s vulnerability to geopolitical shocks.

The world waits on the Supreme National Security Council’s decision. In the meantime, oil-importing nations are scrambling to secure alternative supplies, and global oil companies are reevaluating logistics in anticipation of possible disruptions.

If the Strait is officially shut, analysts warn the ripple effects could be swift and severe—impacting everything from gasoline prices in Lagos and London to inflation rates in Asia and Europe