Hours after the U.S. and Israel launched a campaign of airstrikes across Iran, the Iranian Revolutionary Guard Corps is warning vessels in the Persian Gulf via radio that “no ship is allowed to pass the Strait of Hormuz,” according to a report from Reuters.
The news suggests that Iran is ready to pull out all the stops in its response to the U.S.-Israeli barrage, which President Donald Trump says is aimed at toppling the Iranian regime. A full shutdown of the Strait of Hormuz would cause an international crisis given that 20% of the world’s oil passes through the narrow channel. Financial analysts estimate that even one day of a full blockade could cause global oil prices to double from $66 per barrel to more than $120.
It is not yet clear whether the radio transmissions amount to a full blockade. The Iranian government has long said it could block the strait in case of a crisis, but it has previously avoided doing so, likely because of the major impact that such a move would have on the Iranian economy, which relies on oil revenues.
Major oil companies have already responded to the latest escalation by suspending shipments of oil and natural gas through the narrow waterway, which is flanked by Iran and Oman. The U.S. Navy told companies that it cannot guarantee the safety of commercial vessels anywhere in the Persian Gulf.
Roughly 750 commercial vessels were transiting through the Strait of Hormuz as of Saturday morning, according to Skytek, an intelligence firm that works with shipping insurers. No ships were entering the Gulf, though some were continuing to sail in the direction of the Indian Ocean, the firm said.
Given the heightened level of threat, insurers have already warned clients that insurance rates for ships transiting the Gulf could rise by as much as 50% in the coming days. Insurance firms say the primary reason for this spike in prices is the increased possibility that Iran will blockage the Strait of Hormuz.
A full blockade would draw significant backlash from Kuwait and Saudi Arabia, both of which rely heavily on oil exports that travel through the strait. Iran already infuriated Saudi officials by striking targets in Riyadh and other Arab countries on Saturday despite Saudi promises that it would “not allow its airspace or territory to be used to target Iran.”
