Iran hasn't yet made the Strait of Hormuz central in its fight with Israel. Here's how that could change.

Iranian threats to block energy shipments through the Straight of Hormuz and the fate of the nation's own oil and natural gas production efforts have been anxiously watched since the beginning of its conflict with Israel.
So far, both fronts have been on the sidelines, with observers closely monitoring what changing war dynamics could signal about the ultimate economic consequences of this conflict.
Oil futures have risen over 10% since the fighting started; the sense among analysts is that price pressures could ease if the war remains contained.
But things could quickly go sideways — for oil markets and the global economy — if the coming weeks bring concrete signs of escalation around the Strait of Hormuz.
"Should this key economic chokepoint be closed, that kind of disruption would send the price of oil toward $100 per barrel, or even above that," wrote Joe Brusuelas, the chief economist for RSM US, in a Friday note.
Analysts at JPMorgan Chase have echoed these worries, calling a blocking of the Strait the "worst-case scenario" and suggesting the result could be to push inflation in the US to 5%.
That's because this narrow waterway is where about 20% of the world's oil and seaborne natural gas shipments pass between oil-producing Gulf states — not just Iran, but Saudi Arabia, Kuwait, Iraq, and others — and the rest of the world.
Iran has only made noise so far about closing the Strait, but at least one Iranian leader has reportedly said the US military getting involved could increase the odds.
Ali Yazdikhah, an Iranian lawmaker, was quoted by the country's semi-official Mehr news agency as saying, "If the United States officially and operationally enters the war ... it is the legitimate right of Iran in view of pressuring the US and Western countries to disrupt their oil trade's ease of transit."
Meanwhile, President Trump offered a move toward diplomacy in recent days, saying he will decide in the next two weeks about US action but also pushing back on notions he's taking threats of force off the table.
As he told reporters recently, "I may do it, I may not do it. Nobody knows what I'm going to do."
Noam Raydan, who studies energy and maritime risks at the Washington Institute for Near East Policy, notes that plenty of Iranian oil moves through the Hormuz passageway, so "there's no reason for Tehran at the moment to block the Strait unless it really wants to shoot itself in the foot."
How that changes, she notes, is if Iran's oil infrastructure is severely damaged. "Iran will shut the Strait once it cannot export — this is my simple answer," Raydan said.
But that scenario is a long way off for now, with Israel apparently focusing most of its attacks away from fossil fuel facilities. Indeed, oil disruptions in Iran have been minimal despite fears that followed one Israeli strike on an oil refinery in Tehran.
This has left the world, including Federal Reserve Chair Jerome Powell, in a sort of wait-and-see mode.
"We're watching like everybody else is," the central banker told reporters this past week, though Powell suggested an easing of economic pressure is likely unless tensions in the region spike to levels not seen in nearly 50 years.
What also could emerge to rattle markets — though perhaps less dramatically — are other measures Iran has at its disposal. These range from terrorist attacks to the seizing of some commercial ships.
Experts note that Iran has a variety of other means to disrupt the world economy if its military situation gets more desperate.
Suzanne Maloney, the director of the foreign policy program at the Brookings Institution, noted in a recent analysis that Iran could run out of existing countermeasures soon and that a further escalation may include things like small-scale terrorist attacks and cyberattacks in addition to threats to the Strait of Hormuz.
But, she noted, these are options that "all entail risky tradeoffs, especially the prospect of precipitating US military intervention, which Tehran would prefer to avoid."
The Washington Institute's Raydan offered another possible disruption to watch, noting that "Iran is known for seizing commercial ships in the region in retaliation to US actions ... so I'd say ship seizures are something to watch, and Iran has experience in that."
Possible attacks on shipping were also brought up in a recent Capital Economics analysis that laid out the effects of four potential scenarios in the weeks ahead, ranging from a short conflict to regime change.
Perhaps the most economic uncertainty could come with a scenario of "long-lasting conflict with no off-ramp," which, the group noted, could include regular attacks in the months ahead on shipping and energy transit from both Iran and its proxies.
That's a scenario, they wrote, that "might result in a long-lasting higher oil price in the range of $130-$150 [per barrel], lift inflation in advanced economies by 2-2.5%-pts by end-2025 and would be a major risk-off event in markets."
But the bottom line, the economists added, is that "we may not know the endgame for some time."
Ben Werschkul is a Washington correspondent for Yahoo Finance.
Click here for political news related to business and money policies that will shape tomorrow's stock prices

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Time​ Magazine

35 minutes ago

• Time​ Magazine

Trump's Public Rebuke of Tulsi Gabbard's Statement on Iran

President Donald Trump has said that his Director of National Intelligence, Tulsi Gabbard, was "wrong" to say that Iran is not currently building a nuclear weapon. When asked about the claims made by his intelligence community, specifically Gabbard, Trump was clear, telling reporters on Friday: 'She's wrong.' In March, Gabbard testified in front of Congress that the intelligence community [IC] 'continues to assess that Iran is not building a nuclear weapon, and Supreme Leader [Ali] Khamenei has not authorized the nuclear weapons program that he suspended in 2003. The IC continues to monitor, closely, if Tehran decides to reauthorize its nuclear weapons program." The testimony has resurfaced as Trump weighs his options regarding a potential U.S. involvement in the Israel-Iran conflict, as the Middle Eastern countries trade deadly missiles after Israel launched an operation against Iranian military targets and nuclear facilities on June 13. Read More: Iran Issues New Grave Warning, Says U.S. Involvement in Israel Conflict Would Be 'Very Dangerous for Everybody' Trump's latest comments echo those he made to reporters on Air Force One on June 17, when he said he did not 'care' about what Gabbard had testified earlier in the year. 'I don't care what she said, I think they were very close to having one,' Trump said of his belief that Iran was inching towards having a nuclear weapon. Central to Trump's stance regarding Israel's initial assault on Iran is his belief that Iran has been moving closer to nuclear capability. He has plainly said that 'Iran cannot have a nuclear weapon.' Trump's stance, bolstered by a May 31 International Atomic Energy Agency report (that stated Iran had accumulated roughly 120 kg of uranium enriched to 60%, dangerously close to weapons-grade levels of 90%), undermines previous reports by U.S. intelligence, including that of Gabbard, a former Democrat. Read More: How Netanyahu Pushed Trump Toward War In response to Trump's new assertion that she was 'wrong' in her previous testimony, Gabbard took to social media on Friday, stating that her words had been taken out of context by "dishonest media." Gabbard maintains that she and Trump are on the same page. "The dishonest media is intentionally taking my testimony out of context and spreading fake news as a way to manufacture division," Gabbard said. "America has intelligence that Iran is at the point that it can produce a nuclear weapon within weeks to months, if they decide to finalize the assembly. President Trump has been clear that can't happen, and I agree." Attached to the post was a longer video of her testimony, which also included her claims that 'Iran's enriched uranium stockpile is at its highest levels and is unprecedented for a state without nuclear weapons.' Read More: The 5 Groups Hoping to Sway Trump on Iran Trump reportedly still has 'full confidence' in his intelligence team, according to White House communications director Steven Cheung, but the open disagreements between Trump and members of his Administration signal splinters over the Israel-Iran conflict. The President is facing questions from both within and outside the Republican party, as he weighs up his options during a self-imposed two-week deadline about whether the U.S. will intervene, despite him campaigning on staying out of wars overseas. Republican lawmakers Rep. Marjorie Taylor Greene of Georgia and Sen. Rand Paul of Kentucky have both openly disapproved of any potential U.S. military intervention. Read More: Breaking Down the Feud Between Trump and Tucker Carlson Amid Divide Over Israel-Iran Conflict Meanwhile, former Fox News host Tucker Carlson—a long-time ally of Trump, who even hit the campaign trail with him in 2024—has also spoken out against any U.S. involvement in the Israel-Iran conflict. Carlson's initial comments prompted a blistering response from Trump, and their disagreement soon took a personal turn as the feud escalated. While the situation appears to have since settled—Trump said Carlson called and apologized for his 'strong' words—it's clear that the subject of the Israel-Iran conflict and how the U.S. should move forward is proving to be a divisive one.

The Hill

36 minutes ago

• The Hill

US moving B-2 bombers as Trump weighs Iran response: Reports

Department of Defense (DOD) officials are moving B-2 bombers across the Pacific as President Trump weighs intervening in Israel's war on Iran. Reports from Reuters say the 30,000-pound 'bunker buster bombs' will be stored on the island of Guam while Trump considers the possibility of striking Iran. The DOD referred The Hill's request for comment to the White House, which did not immediately respond to a request for comment. Flight tracking data shows several aircraft leaving Travis Air Force Base with B-2s following the president's statement allotting a two-week deadline for a decision on U.S. intervention in Iran. The bombers were originally being held in Missouri and would likely be used to damage the Fordo nuclear fuel enrichment plant in Iran. Fordo is Iran's second nuclear enrichment facility after Natanz, which was hit by Israeli forces on Friday. The attacks damaged the facility and furthered the Israeli objective to obliterate Iran's efforts to develop nuclear weapons of war. Israel on Saturday said it struck an Iranian nuclear facility in Isfahan and killed two additional top commanders as the clash between the two Middle Eastern countries expands. Israeli Air Force fighter jets later in the day also moved to strike military infrastructure in southwestern Iran, according to an Israeli military statement. Ahead of Saturday's strikes, Iran fired 40 drones overnight on Friday that were intercepted by Israel, according to the IDF. 'We've been able to take out a large amount of their launchers, creating a bottleneck — we're making it harder for them to fire toward Israel,' an Israeli military official told AP on the condition of anonymity. 'Having said all that, I want to say the Iranian regime obviously still has capabilities.' Earlier this week, Israel Defense Forces said they'd killed multiple top commanders and nine engineers working on Iran's nuclear projects. Trump said the conflict would continue until an 'UNCONDITIONAL SURRENDER' was supported by Iran. However, the Iranian Supreme Leader said they would continue to defend themselves amidst the rubble. 'I would like to tell our dear nation that if the enemy senses that you fear them, they won't let go of you. Continue the very behavior that you have had up to this day; continue this behavior with strength,' Ali Khamenei wrote in a post on X.

Boston Globe

an hour ago

• Boston Globe

Sheltering in a bunker, Iran's supreme leader names potential successors

Khamenei has taken an extraordinary series of steps to preserve the Islamic Republic ever since Israel launched a series of surprise attacks last Friday. Although only a week old, the Israeli strikes are the biggest military assault on Iran since its war with Iraq in the 1980s. Iran appears to have overcome its initial shock, reorganizing enough to launch daily counterstrikes of its own on Israel. Iran's top officials are also quietly making preparations for a wide range of outcomes as the war intensifies and as President Donald Trump considers whether to enter the fight. Advertisement Peering inside Iran's closely guarded leadership can be difficult, but its chain of command still seems to be functioning, despite being hit hard, and there are no obvious signs of dissent in the political ranks. Khamenei, 86, is aware that either Israel or the United States could try to assassinate him. Given the possibility, the ayatollah has made the unusual decision to instruct his nation's Assembly of Experts, the clerical body responsible for appointing the supreme leader, to choose his successor swiftly from the three names he has provided. Advertisement Normally, the process of appointing a new supreme leader could take months, with clerics picking and choosing from their own lists of names. But with the nation now at war, the ayatollah wants to ensure a quick, orderly transition and to preserve his legacy. 'The top priority is the preservation of the state,' said Vali Nasr, an Iran expert and professor of international affairs at Johns Hopkins University. This article originally appeared in