Global Oil Markets on Edge
Oil barrels Waldemar/Unsplash

The Israel-Iran conflict has taken a perilous new turn, with fears mounting that Tehran could choke off global oil supplies by blocking the Strait of Hormuz, the world's most vital oil route. As US President Donald Trump demands Iran's 'unconditional surrender' and ramps up military rhetoric, energy markets are on edge.

Iran Could Block Strait of Hormuz

Tehran is reportedly considering a drastic move in response to Israel's widening bombing campaign, which has targeted Iranian nuclear sites and military commanders. According to The Guardian, Iranian state TV aired calls from politicians urging the closure of the Strait of Hormuz, a move that could cripple global oil distribution.

The strait, located between the Persian Gulf and the Gulf of Oman, is the only maritime passage from the Gulf to the open ocean. Nearly 20 percent of global oil passes through it, or more than 17 million barrels a day. If Iran blocks the waterway, experts warn the price of oil could skyrocket and trigger a fresh wave of global inflation.

Oil Prices Could Surge Past Ukraine War Peak

Energy analysts say prices could jump to £89 per barrel ($120), surpassing the £85 ($115) peak seen during the Ukraine-Russia war. As of today, Brent crude trades at around £58 ($78), but that figure already reflects concerns about Iranian exports.

'Any disruption in Hormuz could trigger immediate spikes in energy prices and further strain fragile economies,' said Marina Bhatti, senior analyst at Phoenix Commodities.

Deutsche Bank, however, said a full blockade remains unlikely and that current pricing reflects limited loss of Iranian oil supply.

Can Trump Prevent an Oil Shock?

Some analysts believe Trump could still defuse the crisis. According to Rystad Energy, a global consultancy, US involvement in de-escalating the Israel-Iran war could help contain oil prices. If Washington can broker a pause or reduce tensions, prices could remain under £59 ($80) per barrel.

But Trump's latest comments point in the opposite direction. On 17 June, the US president warned that America's patience with Iran is 'wearing thin.'

Speaking via Truth Social, he claimed to know the location of Iran's Supreme Leader, Ayatollah Ali Khamenei, but said he would not authorise a strike 'at least not for now.'

'We know exactly where the so-called 'Supreme Leader' is hiding. He is an easy target, but is safe there. We are not going to take him out, at least not for now,' Trump wrote.

He followed that post with a blunt all-caps demand: 'UNCONDITIONAL SURRENDER.'

Speculation of US Military Involvement Grows

Trump's remarks, combined with the sudden forward deployment of US aircraft to the Middle East and Europe, have fuelled speculation that Washington may soon take direct military action alongside Israel. Yet earlier statements from Trump suggested otherwise.

'I expect Israel to wipe out Iran's nuclear capabilities without US help,' he told CBS News during his return flight from the G7 summit in Canada.

Still, the risk of escalation looms large. Israel's strikes have killed over 220 Iranians, and Iran has retaliated with ballistic missiles targeting Israeli infrastructure. Tehran's warning over Hormuz suggests that the battlefield could soon extend from missiles to markets, with global consumers paying the price.

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