Iran effectively closed the Strait of Hormuz to commercial shipping Saturday, according to reports from EU naval authorities and Iranian state media, following the latest exchange of military strikes with the United States and Israel. The move immediately raised concerns about global oil supplies, though analysts offered differing assessments of the potential economic impact.
The Iranian Revolutionary Guard Corps (IRGC) began prohibiting passage through the Strait, a critical chokepoint for global energy markets, citing “military aggression” from the U.S. And Israel, the state-run Tasnim news agency reported. A representative of the EU’s Aspides naval mission confirmed the IRGC’s actions, stating that ships were being denied transit as of Saturday afternoon Central European Time.
The Strait of Hormuz, just 50 kilometers (31 miles) wide at its narrowest point between Iran and Oman, is the world’s most important oil transit route. Approximately 20 million barrels of crude oil – roughly 20 percent of global daily consumption – pass through the waterway, according to U.S. Officials. Significant volumes of liquefied natural gas (LNG), particularly from Qatar, also transit the Strait.
While a complete and prolonged closure would severely disrupt oil exports from Saudi Arabia, Iraq, Kuwait, the United Arab Emirates, and Iran itself, Saudi Arabia and the UAE possess limited alternative export routes via pipelines, capable of handling around 2.6 million barrels per day. Qatar, Kuwait, and Iraq are entirely reliant on Gulf ports for oil transport.
The immediate impact on oil prices remains uncertain. Barclays Bank analysts anticipate a potential surge to over $100 per barrel, while other economists suggest the effect may be more moderate. Clemens Fuest, president of the Ifo Institute in Munich, noted that the world is less dependent on Gulf oil than it was in the 1970s. “The oil price increase will not be so massive that it could trigger a recession like it did back then,” Fuest said. “There is a certain shock of uncertainty, but as long as it remains regionally limited, the effects will be regionally limited.”
Moritz Schularick, president of the Kiel Institute for World Economics, echoed this sentiment, stating that the direct effects on the global economy would likely be limited due to the relatively small volume of trade with Iran. “The risks lie in a higher oil price, especially in the event of a regional escalation of the conflict,” he said.
The International Monetary Fund had previously projected global economic growth of 3.3 percent for 2026, a rate comparable to 2025. However, this forecast predates the recent escalation of tensions.
Several oil and gas tankers were already altering course to avoid the Strait of Hormuz, according to reports from shipping news agencies. The German container shipping line Hapag-Lloyd announced it was suspending all transits through the Strait indefinitely. Bloomberg data indicated that some vessels continued to pass through the waterway as of Saturday.
Brent crude oil prices, which reached nearly $80 per barrel during a previous period of heightened tensions between Israel and Iran in the summer of 2025, were trading at almost $73 per barrel on Friday, the highest level since July. This increase already reflects market anticipation of potential conflict.
Jörg Krämer, chief economist at Commerzbank, suggested that Brent crude could move towards $100 per barrel in the short term, characterizing the closure of the Strait of Hormuz as a significant escalation compared to the 2025 conflict. Sustained high oil prices could increase inflation in the Eurozone by more than one percentage point and reduce economic growth by several tenths of a percentage point, Krämer estimated.
Asian countries, particularly China, India, South Korea, and Japan, which rely heavily on oil imports from the Persian Gulf, would be particularly vulnerable to a prolonged disruption. Iran itself remains a significant oil exporter, despite international sanctions, with the International Energy Agency estimating its exports at approximately 1.9 million barrels per day in recent months, with China as its primary customer.
Iran has a history of disrupting shipping in the Strait of Hormuz, including attacks and mining during the Iran-Iraq War in the 1980s, and confrontations with U.S. Warships in 2007 and 2008. In 2021, Iran seized a tanker chartered by Chevron, holding it for over a year.
Despite its role as an oil exporter, Iran’s overall economic importance to the global economy is limited. Decades of sanctions and the rule of the clerical regime have significantly diminished its economic standing. In 1990, Iran accounted for 3 percent of global economic output; currently, its share is around 0.3 percent, according to the IMF.
German trade with Iran has also declined in recent years, with exports falling 25 percent to €963 million in 2025, due to renewed sanctions. Iran accounts for less than 0.1 percent of Germany’s total exports.
A potential regime change in Iran and a subsequent opening to international markets could significantly boost its economy. A study by the Austrian Institute for Economic Research (WIFO) estimates that lifting EU sanctions could increase Iran’s economic output by more than 80 percent in the long term. Increased foreign investment in Iran’s oil and gas sector could lower global oil prices by 6 to 15 percent and gas prices by 10 to 20 percent.
