Strait of Hormuz closure disrupts global oil prices
On March 2, the Strait of Hormuz was closed following the initial events of
the United States (U.S.)-Israel war with Iran. Acting as a focal point for the
passage of about 20 percent of the world’s oil, the closure of Hormuz has
led to economic upheaval felt in many parts of the world.
Hormuz’s closure was declared by an adviser from the
Islamic Revolutionary Guard Corps
(IRGC) following the initial round of
air strikes from the U.S. and Israel onto
Iran on Feb. 28, which resulted in the
death of the Ayatollah Ali Khamenei.
Commercial vessels attempting to
pass through Hormuz have been met by
attacks from the IRGC. On March 1, the
oil tanker Skylight was attacked off the
coast of Musandam, resulting in four
injuries. From Feb. 28 to April 12, ship traffic through the
Strait was reduced by 95 percent. According to Kpler, a data
intelligence and analytics platform, 279 ships are known to have
travelled through Hormuz during this time, showcasing a dramatic decrease as
compared to the average of 100 ships passing per day prior to the beginning of
the war.
Shayda Johnson (’28) explains the importance of oil to the general economy.
“It’s important globally because it’s a really large center of where trading ships
go and a lot of oil embargoes and such... it’s just kind of essential for a global
trading network,” said Johnson.
Shortly following the closure of Hormuz, the price of oil rose over $90 per
barrel, and Brent Crude oil prices temporarily spiked to $119 dollars per barrel
on March 19, based on reports from UN Trade and Development (UNC-
TAD). Gasoline prices in the U.S. surged by 27 percent, with average
prices rising to $4 per gallon by the end of March.
On April 8, a Pakistan-mediated ceasefire
was brokered between the U.S./Israel and Iran,
scheduled to last for two weeks. This ceasefire
was put in place before a U.S. military deadline
for further strikes. Iranian Foreign Minister
Abbas Araghchi said in a post on X that com-
mercial activity would be permitted during the
truce, in line with a ceasefire between Lebanon
and Israel. During the truce, the price of oil
dropped by over 10 percent and 45 ships were
reported passing through Hormuz.
California consistently has the highest gas prices in the
U.S. due to environmental regulations and taxes, and
they’ve continued to increase since the closure of Hor-
muz. The average prices in California are $5.872, increas-
ing from below five dollars in the months leading up to the U.S.- Iran conflict.
On April 13, U.S. forces announced a naval blockade on vessels coming to
and from Iran. The IRGC responded on April 18 by reversing its decision
of re-opening Hormuz, causing Brent Crude oil prices to jump over $95 per
barrel.
U.S. Secretary of State Marco Rubio explains in an interview with Fox News
on April 27 the way in which Iran is using the closure of Hormuz as economic
leverage.
“The Straits is basically the equivalent of an economic nuclear weapon that
they’re trying to use against the world... they’re putting up billboards in Teh-
ran bragging about how they can hold 25 to 20 percent of the world’s energy
hostage ,” said Rubio.
Beimnet Gebermariam (’26) explains his thoughts on the diplomatic rela-
tions between the U.S. and Iran.
“Just last week, they said they were going to open the Strait of Hormuz, and it
still didn’t open. I think that’s a reflection based upon our incompetent diplo-
macy,” said Gebermariam.
According to the U.S. military, two U.S. boats passed through the Strait of
Hormuz on May 4 under the Project Freedom initiative, an initiative designed
by President Donald Trump to safely escort shipping vessels through the wa-
terway. The two passing boats came under fire from Iran missiles, prompting
the U.S. to attack seven Iranian boats, said Trump.
Attacks between Iran and the U.S. have further prolonged the closure of
Hormuz as the U.S. pushes for its re-opening, leaving the global economy in
the hands of Hormuz.
Art by Florence Fraser-Macduff