Hormuz closure reshapes global trade and energy markets
The war’s cost has become a central political issue in Washington. Hegseth faced lawmakers furious over the conflict’s soaring price tag and the deaths last week of three American service members, as he testified before the Senate.
The US launched a fresh round of strikes against Iran on Tuesday, the 11th consecutive night of attacks, targeting aircraft hangars and drone storage sites across the country. Iran has responded with retaliatory strikes on US air bases and neighboring Gulf states, which have accused Iran of deliberately targeting desalination plants essential to life in the region.
The conflict’s fifth month has left both sides locked in a struggle over the Strait of Hormuz, the narrow waterway that carried one-fifth of the world’s oil supply before the war began. Vessels carrying shipments of oil, gas, and fertilizer remain at a standstill. Each side now claims it is preventing the other from gaining control over the strait.
The war’s stated objective has shifted since it began. “Operation Epic Fury” started with the aim of regime change, but its goal has since morphed into reopening the strait and undoing the damage caused by the conflict, according to The Guardian. US Energy Secretary Chris Wright said this week that the US mission had shifted toward ensuring oil shipments could move through the strait — a framing that presents a return to pre-war shipping conditions as a victory. Before February 28, ships had been sailing through the strait without obstruction.
A ceasefire memorandum of understanding that the US and Iran signed on June 17 provided a brief respite from strikes and initiated a 60-day negotiation period aimed at reaching permanent agreement on, among other issues, the future of the strait. The truce broke down after Iran fired on three commercial tankers that had used a shipping lane close to the shores of Oman, rather than a route off the Iranian coast approved by Tehran. Trump declared the ceasefire “over” earlier this month, calling Iran’s leaders “scum.”
Vali Nasr, professor of International Affairs and Middle East Studies and author of “Iran’s Grand Strategy,” told The Guardian that when ceasefires are violated, parties face a choice: “either react to preserve the ceasefire, or use the violation as an excuse to end it.” Trump went with the latter option, Nasr said. He described Trump’s initial assumption as one of a “quick and cost-free” resolution, saying Trump “thought he would go down in history as the American president who had resolved the Iran problem.”
The conflict has also laid bare the depletion of Iran expertise within the administration. Trump has surrounded himself with loyalists, and the US government now has very few Iran experts, according to The Guardian. Nate Swanson, a former State Department representative on Trump’s Iran negotiating team, was forced out earlier this year after far-right activist Laura Loomer accused him of disloyalty.
“Folks who’ve watched this Iranian system … would have told [Trump]: ‘They’re not businessmen from New York. They’re made of a different type of DNA,’” Alex Vatanka, a senior fellow at the Middle East Institute in Washington, told The Guardian.
The economic consequences extend well beyond the region. Inflation caused by rising oil prices is making everyday life more expensive and hiking borrowing costs for governments, including the new UK government under Prime Minister Andy Burnham. Some analysts are predicting global growth could fall by 1.3% if no agreement is reached by 2027, according to The Guardian. Europe, which turned toward the Middle East for gas supplies following the Russia-Ukraine war, may face winter shortages, with some observers drawing comparisons to the 1970s oil crisis.
Trump briefly suggested that the US could charge tolls on ships entering the strait in exchange for safe passage, despite European leaders and his own secretary of state, Marco Rubio, having previously said such tolls would be incompatible with international law. Iran has signaled its desire to permanently control the strait, including by charging tolls on passing vessels.
“The US is now in a situation where it either has a long, protracted war, which would keep the strait closed, or keeps escalating to the next level with the hope of knocking Iran out,” Nasr said. Some experts have expressed concern that other shipping routes could become more militarized as coastal nations watch Iran use the strait as a bargaining chip and attempt to leverage other important waterways. “If nations like the US and Israel can attack your country at any time, you’re going to resort to whatever you can in order to protect yourself,” Nasr said.