Iran temporarily closes Strait of Hormuz during nuclear talks with US

Iran announced a temporary blockade of the Strait of Hormuz on Tuesday, February 17, for live fire drills.

This rare show coincides with another significant round of nuclear talks with the United States in Geneva.

The closure marks the first time Iran has announced the closure of the strategic chokepoint. Through the Strait of Hormuz, around 20% of the global oil supply passes.

Iranian media have reported no specific timeline for the closure of the world’s key oil passageway.

However, “safety and maritime concerns” were cited to close the Strait of Hormuz.

Supreme Leader Ayatollah Khamenei issued stark warnings saying: “The strongest army in the world might sometimes receive such a slap that it cannot get back on its feet.”

What does the Strait of Hormuz closure mean for oil prices?

The closure of the Strait of Hormuz can trigger an immediate and massive surge in oil prices, increasing them by 50% to 80%. With the closure, around 20 million barrels of daily oil supply can’t reach global markets. This move would ultimately disrupt supply, spike shipping costs, and cause severe global economic shock.