Iran’s military command closed the Strait of Hormuz to all maritime traffic on Thursday. The Islamic Revolutionary Guard Corps (IRGC) issued the order following new U.S. military strikes on Iranian targets. The IRGC warned it will target any vessel, including oil tankers and commercial ships, attempting to transit the waterway.
Global oil benchmarks surged immediately following the announcement. Brent crude futures rose 2.47% to reach $95.40 a barrel. U.S. West Texas Intermediate (WTI) crude climbed 2.89% to $92.63.
The closure removes an estimated 11 million barrels per day of production capacity from the global market. Analysts describe the event as the most severe supply shock in the modern oil era. Crude prices could reach $150 per barrel if the escalation continues.