Talks Collapse, Strait Control Tightens: Oil Price Risks from Middle East Grow

The Financial News, New York – Reporter Lee Byung-chulAfter the first cease-fire agreement between the United States of America (US) and the Islamic Republic of Iran fell apart, the Strait of Hormuz has re-emerged as the front line of tensions between the two countries. The US has announced plans to fully control the strait, which Iran had been selectively regulating, raising the level of pressure. Iran, in turn, has warned of a strong response to any approach by warships, heightening the risk of military confrontation and pushing international oil prices higher.

United States Central Command (CENTCOM) announced on the 12th that, starting at 10 a.m. on the 13th (Eastern Time), it would impose a blockade on all vessels entering or leaving Iranian ports. The measure covers all Iranian ports, including those on the Arabian Gulf and the Gulf of Oman. In effect, it targets Iran’s entire maritime logistics network.
US forces will apply the blockade to any ship entering or leaving Iranian ports, regardless of its flag. However, vessels sailing between non-Iranian ports will still be allowed to transit the Strait of Hormuz. Analysts see this selective blockade as a strategy aimed at cutting off only Iran’s maritime influence.
Earlier, US President Donald John Trump had signaled on Truth Social that a blockade procedure for ships passing through the strait was about to begin. He stated, "Vessels that have paid illegal transit fees will not be guaranteed safe passage on the high seas," and warned, "If there is an attack on US or civilian vessels, we will respond forcefully." It was his first hard-line message since the talks collapsed.
The Islamic Revolutionary Guard Corps (IRGC) insisted that the strait remains under Iran’s control. Mohammad Bagher Ghalibaf, the speaker of Iran’s parliament, also declared, "If they start a fight, we will fight," making clear Tehran’s intention to respond in kind.

Washington’s move to assert full control over the Strait of Hormuz is aimed at shutting down Iran’s strategy of selective control. Since the war began, Iran has effectively wielded influence in the strait—through which about 20% of the world’s seaborne oil trade passes—by allowing only certain ships to transit.
According to Cable News Network (CNN), Iran has been charging transit fees of up to 2 million dollars on ships passing through the strait, while allowing the movement of some oil tankers. At the same time, during the war it has exported an average of 1.85 million barrels of crude per day, maintaining foreign-currency inflows. That is about 100,000 barrels per day more than in the previous three months.
The U.S. Energy Information Administration (EIA) estimates that Iranian crude supplied to the market during the war totaled about 140 million barrels. That volume could cover roughly 1.5 days of global oil demand.
The US appears to have chosen a strategy of cutting off Iran’s financial lifeline, even at the cost of higher international oil prices after the breakdown of negotiations. President Trump acknowledged market jitters, saying that "energy prices may remain at current levels or rise somewhat."

As fears of military clashes in the Strait of Hormuz have grown, international oil prices have climbed above 100 dollars per barrel. On the day, Brent Crude Oil futures surged 8.7% to 103.44 dollars per barrel, while West Texas Intermediate crude oil (WTI) jumped by a similar margin to 104.93 dollars.
Energy market analyst Lori Johnston estimated that, so far, the war has disrupted about 13 million barrels per day of crude oil production in the Gulf region. That volume represents roughly 12% of global supply.
If Iran’s export volume of around 2 million barrels per day is also cut off, the global imbalance between oil supply and demand is expected to deepen further.
Michael Lynch, a senior research fellow at the Energy Policy Research Foundation (EPRINC), warned, "With large-scale supply disruptions already caused by the war, if a blockade of the strait is added on top, a shock to the market will be unavoidable."


pride@fnnews.com Reporter Lee Byung-chul Reporter