Iran to Close Strait of Hormuz Amid Israel Conflict – Oil & Gas Impact

by Marcus Liu - Business Editor
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Iran Blocks Strait of Hormuz Amid Rising Tensions

The naval forces of Iran’s Islamic Revolutionary Guard Corps (IRGC) began blocking ships traveling near the Strait of Hormuz on Saturday, February 28, 2026, amid escalating tensions with the United States and Israel. This action raises concerns about global energy supplies and potential economic disruption.

Iran Issues ‘No Passage’ Warning

Vessels in the Middle East have been receiving Very High Frequency (VHF) transmissions from the IRGC stating, “No ship is allowed to pass the Strait of Hormuz,” according to an official from the European Union’s naval force, Aspides [1]. While Iran has not formally confirmed a complete closure of the strait, the warnings effectively halt passage.

Strategic Importance of the Strait of Hormuz

The Strait of Hormuz is a critical waterway connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea. It is described by the U.S. Energy Information Administration (EIA) as the “world’s most important oil transit chokepoint.” [2] A significant portion of the world’s crude oil, approximately a quarter, flows through this narrow passage, making it vital for global energy markets.

Recent Escalations and Iranian Drills

This move follows a period of heightened tensions between Iran, the U.S., and Israel. In June 2025, Israel launched strikes on Iran, triggering a 12-day war that included U.S. Strikes on three Iranian nuclear facilities. Talks between Washington and Tehran regarding Iran’s nuclear program have recently resumed, with a new round of negotiations scheduled in Geneva on Tuesday, mediated by Oman. [2]

Adding to the tensions, the IRGC began naval exercises in the Strait of Hormuz on Monday, February 16, 2026, named “Smart Control of Hormuz Strait.” [3] These drills, supervised by IRGC Commander-in-Chief Major General Mohammad Pakpour, aim to test the readiness of Iranian naval forces and rehearse responses to potential security threats. [3] The exercises focus on rapid and decisive responses to perceived anti-security actions at sea. [3]

Potential Economic Impact

Blocking the Strait of Hormuz could trigger a substantial spike in oil prices, potentially destabilizing the global economy. Brokers have indicated that war risk insurers have issued cancellation notices for policies covering ships traveling through the strait, anticipating a price increase of up to 50%. [4] Disrupting oil tankers traveling from the Middle East to key consumers like China, Europe, and the U.S. Would have far-reaching consequences.

US Response

U.S. President Donald Trump recently announced plans to send a second aircraft carrier to the Middle East, signaling a continued willingness to confront Iran. [2]

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