What the U.S. strikes on Iran could mean for world oil prices

Secretary of State Marco Rubio told Fox News on Sunday that it would be “economic suicide” and a “terrible mistake” for Iran to disrupt movement through the strait.

The Washington Post
June 22, 2025 at 7:19PM

International energy traders on Sunday braced for disruptions as Iran’s parliament endorsed the closure of the Strait of Hormuz, a crucial chokepoint for the world’s oil supply - with the ultimate decision resting with the country’s leadership, according to reports in Iranian state media on Sunday.

Any move to impede the flow of shipping traffic out of the Persian Gulf would likely lead to a spike in oil prices - and higher prices at the gas pump. But how high they will go and for how long is an open question that depends largely on what happens around the Strait of Hormuz. About 20 percent of the world’s oil and natural gas shipments pass through the narrow stretch of water between Iran to the north and Oman to the south.

Secretary of State Marco Rubio told Fox News on Sunday that it would be “economic suicide” and a “terrible mistake” for Iran to disrupt movement through the strait. He urged China, which depends heavily on oil and gas from the region, to pressure Iran to avoid that move.

“It would be, I think, a massive escalation that would merit a response, not just by us, but by others,” Rubio said.

After the U.S. bombing of three of Iran’s nuclear facilities Saturday, Iran’s Foreign Minister Abbas Araghchi said on Sunday there would be “everlasting consequences” for an attack that he called “extremely dangerous, lawless and criminal behavior.”

It remains unclear whether Iran will attempt such a blockade or use mines or missiles to interrupt the flow of commerce through the region.

Before the United States bombed Iran, analysts were already warning that a closure of the strait could push oil prices well past $100 per barrel. That would be more than a 30 percent increase from where they stand today. Such a change could quickly push the average price of a gallon of regular gasoline, now $3.22 according to AAA, toward $4.

Analysts caution, however, that Iran is unlikely to deliver on the threatand note that the nation has vowed to close the strait in the past and never successfully done so.

Most of the oil that goes through the strait is delivered to Asia, and Iran is wary of alienating its ally China, in particular. Iran may also lack the firepower to successfully block the strait.

Regardless of what happens at the Strait of Hormuz, the instability in the region following thestrikes is likely to send oil prices surging - at least temporarily - as soon as international energy trading resumes late Sunday night.

“It’s likely there will be panic buying at the open,” said Denton Cinquegrana, chief oil analyst at OPIS, a Dow Jones company.

Meanwhile, Iran has been taking actions to interfere with energy shipments through the strait by other means, including jamming GPS signals of tankers in the area. The maritime intelligence firm Windward reports that 23 percent of vessels in the area - some 1,600 ships - experienced signal jamming on Sunday, up sharply from Friday, when 970 ships were impacted.

Such actions, however, are generally already factored into current oil prices, which remain in the mid-$70s per barrel of oil.

A Windward spokesman said it was too early to say if shipping patterns through the strait have already changed after the U.S. strikes.

As market watchers remains skeptical of Iran’s ability to shut down the strait, some are predicting that any price spikes for Americans will be short-lived.

“Crude oil will rise, but absent some decisive Iranian response, I would think prices will not hold their gains,” said Simon Lack, portfolio manager at the Catalyst Energy Infrastructure fund. “The U.S. is energy independent so [it’s] less exposed to higher oil prices than most other countries.”

American officials have worried for decades about the vulnerability of the Strait of Hormuz. Over the years, the U.S. has wound down its long-running reliance on Middle East oil and grown into the world’s largest oil producer, now buying just a small percentage of its oil from the region.

Still, disruption of such a key shipping lane would reverberate throughout the world economy. If Iran defies expectations and manages to impose a blockade, prices could rise quickly. JP Morgan analysts warned earlier this month that a full-blown military conflict and a closure of the strait could hike prices as high as $130 per barrel. That would likely push prices at the pump in the U.S. up by more than $1 from where they are now.

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Evan Halper, Joshua Partlow

The Washington Post

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Secretary of State Marco Rubio told Fox News on Sunday that it would be “economic suicide” and a “terrible mistake” for Iran to disrupt movement through the strait.

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