As Israeli jets streak across Iranian skies and Tehran's nuclear facilities burn, the world watches a dangerous escalation unfold. Yet perhaps the most devastating weapon in Iran's arsenal isn't military at all, it's geographic. The Islamic Republic's threat to close the Strait of Hormuz represents an economic "nuclear" option that could plunge the global economy into chaos within days. With oil prices already spiking and Iranian lawmakers seriously considering this drastic measure, we stand at the precipice of an economic catastrophe that would dwarf the military conflict itself.
The Strait of Hormuz is deceptively narrow for a passage that controls the global economy's lifeline. At its narrowest point, this maritime corridor stretches just 21 miles between Iran and Oman, yet through this slender gap flows approximately 20 percent of the world's oil supply. Every day, tankers carrying millions of barrels of crude oil navigate these waters, making the strait what the U.S. Energy Information Administration calls "the world's most important oil transit chokepoint." This geographic reality hands Iran extraordinary leverage over the global economy, a weapon of mass economic destruction that requires no uranium enrichment or sophisticated missile technology.
The current crisis has already demonstrated oil markets' extreme sensitivity to Middle Eastern tensions. FollowingIsraeli strikes on Iranian facilities, Brent crude prices surged 7 percent to over $74 per barrel in a single day. This spike occurred despite no actual disruption to oil flows, merely the threat of escalation was enough to send markets into panic. If Iran follows through on its threat to close the strait, the economic shockwaves would be immediate and devastating.
From Tehran's perspective, closing the Strait of Hormuz represents a compelling strategic option despite its obvious risks. The Islamic Republic faces a fundamental asymmetry in its conflict with Israel and its Western allies. Iran cannot match Israel's technological superiority or the United States' overwhelming military power in conventional warfare. However, Iran's geographic position grants it the ability to inflict economic pain on a global scale, potentially forcing international intervention to halt Israeli operations.
The Iranian leadership understands that economic warfare can be more effective than military action in achieving political objectives. By threatening global oil supplies, Iran transforms a regional conflict into a worldwide crisis, forcing major powers including China, Europe, and even the United States to reconsider their positions. The threat alone serves as a powerful deterrent, as no nation wants to see oil prices spike to levels that could trigger global recession.
Moreover, domestic political pressures within Iran may push the regime toward increasingly drastic measures. Iranian lawmakers are already advancing legislation to withdraw from the Nuclear Non-Proliferation Treaty, signalling their willingness to escalate dramatically. With Israeli strikes targeting Iran's nuclear facilities and reportedly killing 14 Iranian nuclear scientists, Tehran faces enormous pressure to respond with equal severity. Closing the strait would demonstrate strength to the Iranian people while avoiding direct military confrontation with superior forces.
However, this strategy comes with enormous costs. Iran itself relies heavily on oil exports, shipping approximately 1.5 million barrels per day through the very strait it threatens to close. Blocking the passage would devastate Iran's own economy and invite immediate military retaliation from the United States and its allies. The Iranian regime must weigh these costs against the potential benefits of economic leverage, making a partial disruption or threatened closure more likely than a complete blockade.
Iran possesses multiple capabilities to disrupt shipping through the Strait of Hormuz, ranging from conventional naval forces to asymmetric warfare tactics. The Iranian Navy operates fast attack craft and missile boats specifically designed for operations in the strait's confined waters. These vessels, while vulnerable to air attack, could harass commercial shipping and create an atmosphere of danger that might deter tanker traffic even without sinking vessels.
More significantly, Iran has invested heavily in anti-ship missile systems positioned along its coastline. These mobile launchers, difficult to detect and destroy from the air, could target tankers with precision-guided missiles. Even a successful strike on a single large tanker would likely halt commercial traffic as insurance companies refuse to cover vessels transiting the strait. The maritime insurance market is notoriously risk-averse, and the prospect of losing a multi-billion-dollar oil tanker would make coverage prohibitively expensive or unavailable entirely.
Iran's most effective tool might be naval mines, weapons that are cheap, difficult to detect, and devastating to shipping. Unlike missile strikes, which require precise targeting and can be intercepted, mines create persistent danger zones that render shipping lanes unusable until cleared. Iran could deploy mines using small boats, submarines, or even disguised commercial vessels, making detection and prevention extremely challenging.
The Islamic Republic has also demonstrated sophisticated cyber warfare capabilities that could target port infrastructure, navigation systems, and oil facilities throughout the region. Combined with physical attacks, cyber warfare could multiply the disruption and create chaos that extends far beyond the strait itself. The combination of physical and digital attacks would overwhelm response capabilities and maximise economic damage.
Perhaps most concerning is Iran's proven ability to wage asymmetric warfare through proxy forces and unconventional tactics. Small boats packed with explosives, operated by Revolutionary Guard forces or proxy groups, could conduct suicide attacks on high-value targets. Such tactics, while militarily limited, would have enormous psychological impact on commercial shipping operations and insurance markets.
The closure of the Strait of Hormuz would trigger an immediate oil price shock that would dwarf previous energy crises. Iraqi Foreign Minister Fuad Hussein's warning of $200 to $300 per barrel oil prices, while seemingly extreme, reflects the reality of global oil markets' dependence on Middle Eastern supplies. Even JPMorgan's more conservative estimate of $130 per barrel would represent nearly a doubling of current prices, sufficient to trigger global recession.
Historical precedent supports these dire predictions. The 1973 oil embargo, which removed far less oil from global markets than a Hormuz closure would, quadrupled oil prices and triggered a severe recession across developed economies. The 1979 Iranian Revolution disrupted oil supplies and contributed to stagflation that plagued the global economy for years. A complete closure of the Strait of Hormuz would represent a supply shock far more severe than either historical precedent.
The economic effects would cascade rapidly through the global system. Transportation costs would spike immediately, affecting everything from food distribution to manufacturing supply chains. Airlines would face potential bankruptcy as jet fuel costs skyrocket. Chemical and petrochemical industries would see raw material costs explode. Developing nations, already struggling with debt burdens and inflation, would face economic collapse as energy import costs become unsustainable.
Central banks worldwide would confront an impossible dilemma between fighting inflation and preventing recession. Interest rate increases to combat oil-driven inflation would accelerate economic contraction, while monetary easing to support growth would fuel further price increases. This stagflationary trap would force policymakers into choosing between economic evils, likely resulting in both recession and persistent inflation.
For Australia, the closure of the Strait of Hormuz would create a complex economic paradox, generating both enormous opportunities and significant challenges. Unlike most nations, which would face unmitigated economic disaster, Australia's position as a major energy exporter would provide substantial benefits even as other sectors suffer.
Australia's liquefied natural gas exports would become extraordinarily valuable as global energy supplies tighten. The country's position as the world's second-largest LNG exporter would translate into windfall profits for energy companies and massive increases in government royalty revenues. Coal exports, despite environmental Leftist concerns, would see renewed demand as nations scramble for alternative energy sources. The resource sector, which already dominates Australia's export profile, would experience unprecedented profitability.
These energy export windfalls would strengthen the Australian dollar significantly, as international buyers compete for scarce energy supplies. A stronger currency would help offset some inflationary pressures from higher oil prices, providing Australia with a natural hedge against global energy inflation. Government revenues from resource taxation would surge, potentially funding economic stimulus measures to support other sectors.
However, Australia would not escape the crisis unscathed. Domestic fuel prices would skyrocket despite the country's energy wealth, as refined petroleum products compete in global markets. Petrol prices could easily exceed three dollars per litre, devastating household budgets and consumer spending. The tourism industry, already struggling with high costs, would face collapse as international travel becomes prohibitively expensive. Domestic tourism would similarly suffer as fuel costs make travel unaffordable for many Australians.
Manufacturing industries would face severe cost pressures from both energy inputs and transportation. While some sectors might benefit from reshoring as global supply chains break down, energy-intensive industries would struggle with dramatically higher costs. Agriculture, despite Australia's food security advantages, would face higher input costs for fuel, fertilizers, and transportation.
The broader economic effects would manifest through reduced international trade and tourism. Even Australia's resource windfall cannot fully compensate for global recession that would reduce demand for all exports over time. Financial markets would experience extreme volatility, affecting superannuation balances and investment portfolios. Real estate markets might face contradictory pressures from energy wealth and economic uncertainty.
The threat to close the Strait of Hormuz represents more than an economic weapon, it symbolizes the broader breakdown of the international system that has maintained relative stability since World War II. Iran's willingness to consider such drastic action reflects the regime's desperation and its calculation that the existing order offers no path to survival. This crisis could mark a turning point toward a more chaotic and economically fragmented world.
The precedent of successful economic warfare through chokepoint control would encourage other nations to weaponise their geographic advantages. China's position in the South China Sea, Russia's control over European energy supplies, and Turkey's command of the Bosphorus could all become tools of coercion in future conflicts. The global economy's vulnerability to geographic disruption would fundamentally alter international relations and trade patterns.
Moreover, the crisis demonstrates the fragility of modern economic systems built on complex global supply chains and just-in-time delivery systems. The rapid price spike following mere threats of disruption reveals how little buffer exists in global energy markets. This vulnerability extends beyond oil to other critical commodities, suggesting that future conflicts could trigger cascading economic crises through multiple channels simultaneously.
As Iranian lawmakers debate their "nuclear" options and oil markets shake with each news cycle, the world confronts a sobering reality about economic warfare in the modern era. The Strait of Hormuz closure represents an economic weapon of mass destruction that could inflict more damage than conventional military force. For Iran, this geographic chokepoint offers a path to relevance and leverage in a conflict where conventional military options appear limited.
The global economy's dependence on this narrow waterway exposes fundamental vulnerabilities in the international system. Whether Iran ultimately follows through on its threats may determine not only the outcome of the current Middle Eastern crisis but the future structure of global trade and economic relations. Australia's unique position as both beneficiary and victim of such disruption illustrates the complex interdependencies that characterise modern economic systems.
The coming weeks will test whether diplomatic solutions can defuse this crisis before economic warfare becomes reality. If Iran does close the strait, the resulting economic catastrophe would reshape global politics for decades to come, proving that in the modern world, geography remains the ultimate strategic weapon.
https://michaeltsnyder.substack.com/p/100-200-300-how-catastrophically
"It is being reported that Iran is seriously considering closing the Strait of Hormuz. We don't know how high the price of oil will go if that happens, because it has never happened before. Of course I think that it would be safe to assume that the price of oil would rapidly surpass the $100 mark, and if it stays there for an extended period of time that would be enough to push us into a recession all by itself. But if the price of oil were to surpass the $200 mark and stay there, I believe that could be enough to actually push us into an economic depression. Shockingly, as you will see below, there is one official in the Middle East that is convinced that the price of oil could go up to $300 a barrel if Iran closes the Strait of Hormuz. Needless to say, that would be a nightmare scenario.
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All of this has been coming for a long time. As I documented on Friday, we were warned that the price of oil would go nuts once a major war erupted between Israel and Iran, and we were also warned that Israel would be blamed for the high price of oil because they struck first. At the end of last week the price of oil was up about 5 dollars a barrel, but if the Strait of Hormuz gets closed that will send the price of oil into the stratosphere.
Unfortunately, we are being told that Iranian leaders are "seriously" considering making such a move…
The closure of the strategic Strait of Hormuz is being seriously reviewed by Iran, IRINN reported, citing statements by Esmail Kosari, a member of the parliament's security commission.
The Strait of Hormuz, which lies between Oman and Iran, is the world's most important gateway for oil shipping.
The Iranians understand that they can hold the global economy hostage, because approximately 20 percent of all global oil consumption travels through the Strait of Hormuz…
According to the US Energy Information Administration, about 20 percent of global oil consumption flows through the strait, which the agency describes as the "world's most important oil transit chokepoint". At its narrowest point, it is 33km (21 miles) wide, but shipping lanes in the waterway are even narrower, making them vulnerable to attacks and threats of being shut down.
If the Iranians do this, most experts are anticipating that the price of oil will go well above $100 a barrel.
But Iraqi Foreign Minister Fuad Hussein believes that the price of oil could actually rise as high as $300 a barrel…
Escalating tensions in the Middle East and a potential closure of the Strait of Hormuz could drive oil prices up to $300 per barrel, Iraqi Foreign Minister Fuad Hussein warned during a phone conversation with German Foreign Minister Johann Wadephul.
On Friday morning, Israeli jets bombed military and nuclear sites across Iran, kicking off an ongoing exchange of hostilities between the two countries.
According to Hussein, oil prices could surge to between $200 and $300 per barrel "if military operations were to break out, which would significantly increase inflation rates in European countries and complicate oil exports for producing states such as Iraq."
I don't think that we will see the price of oil go quite that high.
But if the price of oil even doubles from current levels, it will be a crippling blow for the global economic system.
And even if the Strait of Hormuz is not closed down, this war is going to push the price of oil much higher anyway.
After the Iranians started hitting major cities in Israel, the Israelis started going after Iranian energy infrastructure.
For example, we now have stunning video of fires at the Shahran oil depot in Tehran reaching into the night sky…
And an Israeli drone strike has caused extensive damage at a very important refinery in Iran's Bushehr province…
A fire broke out at Kangan Port in Iran's Bushehr province following an Israeli drone strike targeting on onshore refinery at Phase 14 of the South Pars gas field in the Persian Gulf on Saturday. It was the first attack by Israel specifically targeting Iran's critical energy sector.
Of course destroying Iran's energy infrastructure is not the primary goal for Israel.
The primary goal is to damage Iran's nuclear facilities as much as possible.
At Natanz, it appears that IDF strikes have been "extremely effective"…
Initial assessments indicate that Israel's strikes on Iran's Natanz nuclear facility were extremely effective, going far beyond superficial damage to exterior structures and knocking out the electricity on the lower levels where the centrifuges used to enrich uranium are stored, two US officials told CNN.
"This was a full-spectrum blitz," said another source familiar with the assessments.
The strikes destroyed the above-ground part of Natanz's Pilot Fuel Enrichment Plant, a sprawling site that has been operating since 2003 and where Iran had been enriching uranium up to 60% purity, according to the International Atomic Energy Agency (IAEA). Weapons-grade uranium is enriched to 90%.
But Fordow is an entirely different story.
Without U.S. help, Israel simply does not have the ability to do much damage there…
The Fordow Fuel Enrichment Plant is a far more difficult site to target. The plant is buried deep in the mountains near Qom, in northern Iran, and houses advanced centrifuges used to enrich uranium up to high grades of purity.
Israel targeted the site during its Friday attacks, but the IAEA said it was not impacted and the IDF has not claimed any significant damage there. Iranian air defenses shot down an Israeli drone in the vicinity of the plant, Iranian state media outlet Press TV reported Friday evening.
"The expectation has always been that Israel would not be able to reach (Fordow), because it would need the kind of bunker-buster, massive ordinance bombs that only the United States has," Vaez said.
If Fordow continues to operate once this is all over, it will be a major defeat for Israel and a major victory for Iran.
So we will want to watch what happens at Fordow very closely.
Israel is also working to eliminate as many Iranian nuclear scientists as possible.
So far, it appears that a total of 14 Iranian nuclear scientists are dead…
Israel has killed 14 Iranian nuclear scientists in a series of attacks that reportedly included car bombs, Iran has claimed.
Sources told Reuters that the attacks, which have taken place since Friday, were designed to cripple Iran's ability to create nuclear weapons. Local media reported Tehran was hit by five car bombs.
Ultimately, Israel wants to make it impossible for Iran to produce nuclear weapons.
But could this war make Iran more determined than ever to push forward with their program?
Right now, Iranian lawmakers are reportedly considering a bill which would withdraw Iran from the Nuclear Non-Proliferation Treaty…
On Sunday, Iranian lawmakers pushed forward a bill to withdraw from the Nuclear Non-Proliferation Treaty (NPT).
MP Meysam Zahourian revealed an expedited bill mandating Iran's exit from the NPT under Article 10, which permits withdrawal in the face of extraordinary threats to national interests, awaiting formal endorsement and legal review.
Zahourian described the move as a legal countermeasure to recent developments undermining Iranian sovereignty, and is expected to proceed rapidly through the Islamic Consultative Assembly (Iran's Parliament).
So why would Iran want to withdraw from that treaty?
I will give you only one guess.
The Nuclear Non-Proliferation Treaty prevents nations that currently do not have nuclear weapons from getting them.
If Iran pulls out of that treaty, this crisis will go to an entirely different level.
For decades, we have been warned of the threat of nuclear war.
But that threat has never materialized.
Sadly, I believe that we live at a time when nuclear weapons will actually be used.
https://www.infowars.com/posts/iraq-warns-of-300-per-barrel-oil
"Escalating tensions in the Middle East and a potential closure of the Strait of Hormuz could drive oil prices up to $300 per barrel, Iraqi Foreign Minister Fuad Hussein warned during a phone conversation with German Foreign Minister Johann Wadephul.
On Friday morning, Israeli jets bombed military and nuclear sites across Iran, kicking off an ongoing exchange of hostilities between the two countries.
According to Hussein, oil prices could surge to between $200 and $300 per barrel "if military operations were to break out, which would significantly increase inflation rates in European countries and complicate oil exports for producing states such as Iraq."
The closure of the Strait of Hormuz, a key transport route, could "result in the loss of approximately five million barrels per day from Gulf and Iraqi oil supplies in the global market," the Iraqi foreign minister was quoted as saying.
The Strait of Hormuz is a critical maritime passage through which about 20% of the world's oil supply flows. On Saturday, Iranian MP and Islamic Revolutionary Guard Corps commander Esmail Kousari stated that Tehran is seriously considering closing the strait to shipping.
Analysts have highlighted the potential impact of such a closure on global oil prices. JPMorgan analysts estimate that in a severe scenario, oil could surge to $130 per barrel. Other experts suggest that a complete blockade could push prices even higher, with some forecasts reaching $300 per barrel.
Brent crude prices rose 7% on Friday to $74.23 per barrel in response to the first attacks. While Israel has not targeted Iran's main oil export facilities, analysts warn that future strikes could severely impact oil supplies. Conversely, the Islamic Republic could retaliate by disrupting oil shipments through the Strait of Hormuz.
Meanwhile, in Russia, the head of the Federation Council's information policy commission, Aleksey Pushkov, has said that the conflict between Israel and Iran could lead to a significant increase in oil prices due to Tehran's possible blocking of the Persian Gulf."