Iran’s renewed closure threat at a key oil chokepoint has analysts warning of a major price surge.
A peace deal between the United States and Iran lasted just three days before unraveling. President Trump and Iranian President Masoud Pezeshkian signed the agreement on June 17, but Iran’s military command announced days later that it was closing the Strait of Hormuz again, even as Iran simultaneously sent a negotiating team to Switzerland for follow up talks.
The conflicting moves have left oil markets bracing for volatility, with some analysts warning that prices could climb as high as $150 a barrel if the closure holds.
Iran blames Israel for the renewed closure
Iranian officials say continued Israeli strikes in Lebanon violated the truce signed on June 17, framing the strait’s closure as a response rather than a new act of aggression. Still, the timing raised questions. Technical talks between Iran and the United States were scheduled to begin in Switzerland on Sunday, June 21, just one day after the closure was announced, with Iranian negotiators reportedly still preparing for the trip when the military statement was released.
Why this single waterway matters so much
The Strait of Hormuz spans roughly 21 miles at its narrowest point, between Iran and Oman. On a typical day, it carries about one-fifth of the world’s seaborne oil, close to 20 million barrels, along with a substantial share of global liquefied natural gas shipments.
There is no real alternative route capable of absorbing that volume. Saudi Arabia has pipeline access to the Red Sea and Oman has its own geographic advantages, but neither can fully replace the strait if it closes. Because of this, oil markets tend to price in risk the moment a credible threat emerges, often before there’s any confirmation that shipping has actually slowed.
The U.S. disputes Iran’s claim
U.S. Central Command pushed back firmly against Iran’s announcement. CENTCOM spokesperson Captain Tim Hawkins said Iran does not control the strait and that vessel traffic was continuing as U.S. forces monitored the situation. The numbers appeared to support that claim, with 55 merchant ships passing through the strait on June 20, carrying more than 17 million barrels, one of the highest single day totals recorded since the conflict began, even as Iranian state media reported the strait was closed.
Brent crude has swung wildly since February
Oil prices have been unpredictable since the conflict began in late February, with Brent crude spiking to $124.68 in early April before dropping each time a ceasefire appeared to take hold. The pattern has repeated itself with each new development. Closure announcements tend to trigger immediate price jumps driven by fear, and if shipping data later shows tankers still moving, those gains often fade within days. A prolonged closure, however, could prompt a more significant repricing across the entire oil market.
A reopening announcement on June 14 had pulled prices back down from recent highs, but the new closure threat puts that progress at risk.
How high prices could climb
Financial institutions have offered a range of forecasts. JPMorgan’s commodity desk has warned that Brent could reach $120 to $130 a barrel in the near term if disruptions continue, with $150 possible if conditions worsen. The bank’s global head of economics, has said a full month long blockade could push Brent toward that $150 mark. Goldman Sachs has projected similarly, suggesting Brent could remain in triple digits for months if the strait stays largely closed. Some traders have even floated the possibility of $200 oil in a worst case scenario, a price point high enough to meaningfully reduce driving and air travel.
What it means for gas prices and the economy
Rising crude prices typically reach the pump within two to four weeks. Gas prices have already increased significantly since February, and a sustained closure would likely push them higher still, straining household budgets and businesses that depend on fuel and shipping.
The situation also complicates the Federal Reserve’s path forward. Inflation has remained persistent throughout the conflict, and another increase in oil prices would likely raise transportation and manufacturing costs within weeks, making interest rate cuts a harder case to make.
Could prices come back down
It’s possible, but would require clear evidence that the closure isn’t permanent. Earlier in the conflict, prices fell quickly whenever diplomatic talks showed progress or shipping data confirmed tankers were still moving despite threats. Iran’s negotiators continuing toward Switzerland suggests the situation may not be as dire as the closure announcement implies. Vice President JD Vance pointed to a sharp rebound in tanker traffic as a sign that things hadn’t broken down entirely. Still, with mixed signals from all sides, oil traders are left trying to price a threat that even the side issuing it may not be fully committed to.