In a major escalation following U.S. airstrikes on Iranian nuclear facilities, Iran’s parliament has reportedly supported a proposal to close the Strait of Hormuz, a critical global chokepoint.
Though not yet final, the decision has been made by the Iranian Parliament and now lies with Iran’s Supreme National Security Council, raising fears of surge in energy prices and heightened geopolitical tensions.
Iran’s state-run Press TV reported on 22 June that the Supreme National Security Council will make the ultimate decision on the strait’s closure, after parliamentary support for the move was reported by several Iranian outlets. No formal bill has been officially passed, but Esmail Kosari, a member of the parliament’s National Security Commission and a Senior Commander in the Islamic Revolutionary Guard Corps (IRGC), said parliament had “come to the conclusion we should close the Strait of Hormuz” while emphasizing that the council alone holds the authority to act.
Furthermore, Foreign Minister Abbas Araghchi declined to confirm any specific plans, stating only that “a variety of options are available to Iran” leaving the international community uncertain about Tehran’s next move.
At the the other end of the table, U.S. Secretary of State Marco Rubio has urged China to intervene, noting that China heavily relies on crude oil passing through the strait. In a interview with Fox News on 22 June, Rubio stated, “I encourage the Chinese government in Beijing to call them [Iran] about that… If they [close the Strait], it will be economic suicide for them. And we retain options to deal with that, but other countries should be looking at that as well. It would hurt other countries’ economies a lot worse than ours.”
However, as reported by BBC, on 23 June Beijing stated that the U.S. strikes had damaged Washington’s credibility and called for an immediate ceasefire. Following the U.S. strikes, global oil markets have reacted swiftly with brent crude climbing to its highest level in five months amid fears of disrupted supply.
Why is the Strait of Hormuz so important?
The Strait of Hormuz is a vital artery for the global energy market, with roughly one-fifth of the world’s total oil consumption passing through it. Between early 2022 and last month, an estimated 17.8 million to 20.8 million barrels per day of crude oil, condensate, and refined fuels flowed through the narrow waterway, according to data from analytics firm Vortexa.
It serves as the primary export route for several major oil-producing nations, including key OPEC members such as Saudi Arabia, Iran, the United Arab Emirates, Kuwait, and Iraq. Most of their crude exports, particularly to Asia, rely heavily on safe passage through the strait.
Given its strategic importance, the U.S. Fifth Fleet, headquartered in Bahrain, is tasked with ensuring the security of commercial shipping in the region, underscoring the waterway’s critical role in maintaining global energy stability.
A potential closure of the Strait of Hormuz would have sweeping consequences for international shipping and energy markets. According to Drewry, even under current conditions, vessels transiting the Strait are facing increased war risk premiums, currently estimated at 0.05% to 0.07% of a ship’s hull and machinery value for a typical seven-day stay.
These rates have held steady for over a year, but further escalation could send premiums and freight rates surging.
On the second scenario, if the Strait were to become impassable, rerouting options exist but come with steep logistical and economic challenges. Ships could divert to ports in Oman such as Duqm and Sohar or the UAE’s Khorfakkan, using overland transport to continue cargo movement.
Another possibility involves sailing through the Gulf of Aqaba and using overland routes, though that option is constrained by limited infrastructure and regional security risks. Drewry has highlighted that all alternatives would result in extended transit times, operational complexity and sharply higher costs, disrupting global supply chains across multiple sectors.
