Iran Closes the Strait of Hormuz – Oil Prices Soar, Crypto Sways

Iran closes the Strait of Hormuz! The decision, though not yet finalized, comes in response to a U.S. military offensive targeting Iran’s nuclear facilities, a move that has instantly rattled global markets.

While the ultimate power to enforce the closure rests with Iran's Supreme National Security Council and Supreme Leader Ayatollah Ali Khamenei, the approval from parliament alone has sent oil prices climbing and caused ripples across financial markets, including crypto.

Iran Closes the Strait of Hormuz

Iran's parliament has approved a motion to close the Strait of Hormuz, one of the most strategically vital waterways in the world. The Strait of Hormuz connects the Persian Gulf to the Arabian Sea and acts as a maritime lifeline for global oil transportation. 

Around 20 million barrels of crude oil pass through this narrow corridor daily, accounting for nearly 30% of global seaborne oil trade and 20% of total daily consumption.

The passage is especially crucial for countries like China, India, Japan, and South Korea, all of which depend heavily on Gulf oil. Simply put, if the strait closes, oil delivery bottlenecks would trigger a global supply shock.

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What Triggered Iran's Decision

Source: The Guardian

The backdrop to Iran's decision is a high-stakes military escalation. The U.S. launched "Operation Midnight Hammer", targeting nuclear sites at Fordo, Natanz, and Isfahan. 

President Donald Trump hailed the operation as a “spectacular success”, claiming that Iran’s nuclear capabilities were “completely obliterated.”

In response, Iran’s parliament took swift action by voting to shut down the Strait of Hormuz, framing the move as a countermeasure to protect national interests. 

While symbolic for now, the vote indicates Tehran's readiness to leverage its geographic control of the strait in this escalating geopolitical game.

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Oil Prices Reacted Immediately

Oil markets didn’t take long to respond. Brent crude spiked to $77.01 per barrel on Friday and is expected to shoot up by $3 to $5 when markets reopen.

Analysts from JPMorgan have warned that, in a worst-case scenario, prices could soar to $130 or higher, echoing levels not seen since the 2008 global financial crisis.

A long-term closure of the strait could lead to worldwide inflation, pushing up fuel, transportation, and food prices. Global GDP could fall by 1–2%, experts warn, if the disruption drags on.

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Crypto Reacts: Bitcoin Price Takes a Hit

Source: Crypto Briefing

Interestingly, it’s not just oil feeling the heat. Bitcoin dropped from nearly $103,000 to below $99,700 shortly after news of the Iranian vote hit headlines.

Though not directly connected to oil, cryptocurrencies are highly sensitive to geopolitical instability. The vote to close the strait has:

1. Increased investor uncertainty.

2. Prompted a flight to less volatile assets.

3. Raised questions about how rising energy costs might affect crypto mining and adoption.

The crypto dip underscores how even decentralized assets are not immune to real-world geopolitical shocks.

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Conclusion

The vote to close the Strait of Hormuz has already changed the global economic outlook. While the measure is not yet legally binding, it’s a loud warning shot in a region already brimming with tension.

Oil prices are set to spike, and crypto markets have already started reacting. As the world watches Iran’s next move, one thing is clear, any closure of the strait will send shockwaves across both traditional and digital economies.

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FAQ

Is the Strait of Hormuz already closed?

Not yet. Iran’s parliament approved the measure, but it still requires final authorization from the Supreme National Security Council and Ayatollah Ali Khamenei.

Why is this waterway so important?

About 30% of the world’s seaborne oil travels through the Strait of Hormuz. A closure would severely disrupt global energy supplies.

How high could oil prices go?

Some analysts predict Brent crude could hit $130 per barrel or more if the strait remains closed for an extended period.

Why did Bitcoin’s price drop?

Bitcoin reacted to increased geopolitical risk and market volatility, as investors often reduce exposure to high-risk assets during uncertainty.

Could this situation affect the global economy?

Yes. A sustained rise in oil prices could trigger inflation, increase transportation costs, and slow global economic growth.