Oil Prices Could Soar to $150 as Iran Approves Strait of Hormuz Closure Amid Rising Tensions

In a bold geopolitical move, Iran’s parliament has approved the closure of the Strait of Hormuz, a narrow but essential passage that channels about 20% of the world’s oil and liquefied natural gas (LNG). This development comes on the heels of a U.S.-led airstrike on Iranian nuclear facilities, sharply escalating tensions in the Middle East. If Iran follows through with the decision, it could disrupt a critical artery for global energy supply and send shockwaves through international markets.

Experts warn that any disruption in the Strait could catapult global oil prices from under $80 to as high as $150 per barrel. Such a surge would not only spike inflation worldwide but also rattle energy security and hamper global economic growth. Nigel Green, CEO of deVere Group, noted that investors should brace for volatility, with sharp increases in crude oil prices and intensified scrutiny on inflation projections expected as markets reopen.

Beyond oil prices, the closure could severely impact international trade routes, leading to higher shipping costs and widespread supply chain delays. Countries like India, which are heavily dependent on oil imports, face acute economic vulnerability. The U.S. Energy Information Administration reports that 84% of crude oil exports through the Strait in 2024 were headed to Asian economies, including India, China, Japan, and South Korea, indicating a widespread ripple effect.

Although Iran has often threatened to close the Strait, it has never acted on it. Analysts caution that doing so would damage Iran’s own economic interests, particularly its exports to China—its largest customer. Anas Alhajji of Energy Outlook Advisors points out that such a move would be self-sabotaging and likely a last resort. Nevertheless, with the situation intensifying, experts are no longer ruling out the possibility.

The geopolitical stakes are high, with the potential closure of the Strait of Hormuz serving as a flashpoint in an already volatile region. A military or diplomatic misstep could ignite broader conflict and plunge energy markets into further disarray. As world powers monitor Iran’s next steps, the global economy hangs in a delicate balance, vulnerable to both immediate shocks and long-term consequences tied to energy and security.

Source: Nairametrics