Hormuz blockade could deepen world’s worst energy crisis — and risk a dangerous misstep
Lightning occurs as META 4, a Petroleum Products Tanker, departs for Muscat Anchorage in Sultan Qaboos Port in Muscat, Oman, on March 21, 2026.
Elke Scholiers | Getty Images
President Donald Trump ordered a naval blockade of the Strait of Hormuz on Sunday, dampening hopes for a quick end to the conflict in the Middle East and escalating tensions with Iran that have triggered the worst energy shock in history.
In a statement made by US Central Command, it was stated that the blockade will go into effect at 10:00 on Monday morning and will target ships of all nations entering or exiting Iranian ports and coastal areas, including the Persian Gulf and Gulf of Oman.
According to Lloyd’s List Intelligence, tanker traffic in the Bosphorus began to increase after the two-week ceasefire announced by Trump last week, but came to a halt again a few hours after Trump’s announcement. At least two ships that appeared to be heading for the exit turned back.
Crude oil rose as investors sought to price in further contraction in Persian Gulf supply. US WTI futures May delivery rose more than 8% to $104.40 a barrel. Brent crude oil It rose over 7% to $101.86.
Trump’s order came after 21 hours of talks between Washington and Tehran over the weekend collapsed without an agreement on Iran’s nuclear program, control of the waterway and Israel’s ongoing attacks against Iran-backed Hezbollah in Lebanon.
Oil shock deepens
Before the US and Israel’s opening attacks on Iran on February 28, approximately one-fifth of the world’s oil passed through the Strait of Hormuz. That flow has since slowed to a trickle, disrupting supply chains for oil, fertilizer, clothing and industrial goods. Analysts warned that clearing the backlog could take weeks even after resolution.
A complete blockade would further increase the squeeze. “Withdrawing more oil from the market, especially the only oil currently coming out of the Persian Gulf, will cause oil prices to rise even further… [to] “About $150 a barrel,” Trita Parsi, vice president of the Quincy Institute for Responsible Government Administration, said on CNBC. “China Connection” on Monday.
Since neither side has clearly stated that the negotiations will not continue or that the ceasefire is over, all these moves need to be evaluated as tactics and threats in the negotiations.
Trita Parsi
vice president of the Quincy Institute for Responsible Government Administration
In addition to crude oil, commodity prices for fertilizer and helium, which are critical inputs for food production and semiconductor manufacturing, will continue to rise, fueling already accelerating inflation, said Ben Emons, managing director at Fed Watch Advisors.
IMF and World Bank officials signaled last week that they would do so. reduce global growth He increased his forecasts and raised his inflation forecasts, warning that emerging markets would be hit the hardest.
“The economic scar from attacks on energy facilities and ports in Iran and other Gulf countries could continue to pressure supply in developing Asia,” Barclays said. “Time will tell how quickly the extraction, refining and loading of oil and gas can be normalized.”
A month-long blackout in the Strait of Hormuz has led to warnings of an energy shortage worse than the oil crisis of the 1970s. Embargo of Arab producers Oil prices in US-aligned countries quadrupled, leading to fuel rationing in major economies.
Liberian-flagged crude oil tanker Shenlong Suezmax successfully docked at Mumbai Port after crossing the high-risk Strait of Hormuz amid the intensifying West Asian conflict in Mumbai, India, on March 11, 2026.
Hindustan Times | Getty Images
International Energy Agency President Fatih Birol addressed the outage last week worst energy shock This crisis the world has ever seen was more severe than the oil crisis of the 1970s and the Ukrainian war combined.
“This is a historic disruption in world oil,” said Daniel Yergin, vice president of S&P Global. Interview with Barron last month. “There has never been anything on this scale. Not even the oil crises of the 1970s, the Iran-Iraq war in the 1980s, Iraq’s invasion of Kuwait in 1990 — none of these come close to the magnitude of this disruption.”
But David Lubin, senior research fellow at Chatham House, said the price response has been more muted so far and economic growth may be more resilient than feared. He noted that the global economy is less oil-intensive than in the past, with oil use per unit of GDP now requiring roughly 40% of a barrel of oil, compared to a full barrel in the early 1970s. Wind, solar and nuclear are also diversifying the energy mix in ways that did not exist fifty years ago, Lubin noted.
If the conflict escalates further, “it is quite possible that the energy impact of this crisis will begin to create a negative shock as large as the crisis of the 1970s,” he said.
China is on target
The blockade also risks drawing the world’s second-largest economy into the conflict. China remains Iran’s largest oil buyer Analysts say it has continued to receive shipments through the strait since the war began.
A blanket ban on tankers carrying Iranian crude threatens to cut off that supply and has the potential to reignite US tensions with Beijing ahead of Trump’s planned trip to China next month. “I doubt that Trump is ready to escalate these tensions,” Parsi said, adding that it would “not be a surprise” if Trump backed down from previous threats.
On Monday, the Trump administration also threatened to impose sanctions. 50 percent additional customs duty to China If Beijing supplies advanced defense equipment to Tehran.
Countries including India and Pakistan, which are negotiating safe passage arrangements with Iran, could also find themselves caught in the crossfire, Parsi said.
Negotiating tactic or miscalculation?
Some analysts see the blockade as a coercive tool rather than a final escalation. “All these moves should be considered tactics and threats in the negotiations, as neither side has clearly stated that the negotiations will not continue or that the ceasefire is over,” Parsi said. he said.
Brian Jacobsen, chief economist at Annex Wealth Management, suggested with cautious optimism that Washington could create safe passage exemptions for allied ships. But Emons warned that the strategy carries significant downside risk.
A move designed to bring Iran “to its knees” could easily trigger counter-attacks and a new cycle of military tensions, he said.
Iran’s Islamic Revolutionary Guard Corps also signaled this on Sunday, warning against any military ship approaching the strait. “Under any excuse” It will be considered a violation of the ceasefire. He also toughened up his rhetoric, saying that in case of any miscalculation, enemies would be trapped in a “deadly vortex.”
There is no legal basis
According to many experts, the blockade is also controversial from a legal perspective; because neither the USA nor Iran has the authority to close or block the passage through Hormuz.
“Under international law, particularly the rules governing the international straits, the United States has no legal authority to close, suspend or prevent transit through Hormuz,” Emons said. He added that only Iran and Oman are coastal states and even they are prohibited from suspending transit.
For shipowners, the practical deterrent of transiting the strait also includes exposure to Western sanctions against Iran. Payments to Iran risk violating U.S. and European rules and companies could face serious penalties, according to Lloyd’s List Intelligence.
