Key Takeaways:
Iran warned it will revoke recognition of the Strait of Hormuz's southern shipping lane if Oman rejects its terms, threatening to choke off a waterway that carries about one-fifth of the world's oil.
Iran said it will no longer recognize the southern route of the Strait of Hormuz if Oman does not accept its conditions, escalating a confrontation that has already disrupted global energy markets and drawn the US into 11 consecutive nights of airstrikes. The strait handles about 20 million barrels of oil daily, or roughly 21% of global seaborne crude trade.
"From Iran's perspective, opening additional pressure points across the region gives it more leverage," said Ahmed Nagi, senior Yemen analyst at the International Crisis Group. "The Houthis provide Tehran with influence over one of the world's most important maritime chokepoints."
The threat compounds an already dire situation. Iran has attacked more than 30 commercial vessels transiting the Strait of Hormuz over the past three months, according to US Central Command, which insists the waterway remains open. President Donald Trump said the US would bomb a bridge or power plant each time Iran attacks a ship in the strait. The Pentagon is seeking an additional $67 billion for the conflict, which has cost $37.5 billion to date, Defense Secretary Pete Hegseth told Congress.
The southern route of the strait has become the primary alternative after Iran effectively controls the northern side through its territorial waters and military positions on Qeshm and Hormuz islands. Revoking recognition of that lane would leave commercial shipping with no internationally sanctioned path through the chokepoint, forcing tankers to either risk passage or reroute around the Cape of Good Hope — adding one to two weeks to voyages and raising costs.
Oil flows face twin chokepoint pressure
The Hormuz escalation coincides with renewed threats at the Bab el-Mandeb strait, where Iran-backed Houthi rebels in Yemen announced a blockade on Saudi-linked shipping last week. More than 7 million barrels of petroleum a day transited Bab el-Mandeb in June, compared with about 4 million before the Iran war, according to Allison Minor, director of the Atlantic Council's Project for Middle East Integration.
Saudi Arabia has been exporting about 4 million barrels of oil a day through its Red Sea port of Yanbu, blunting the impact of the Hormuz closure. At least eight very large crude carriers are now en route to Egypt's Sidi Kerir port to pick up Saudi crude, according to vessel-tracking data compiled by Bloomberg, as the kingdom reroutes exports through the SUMED pipeline to the Mediterranean.
Tanker traffic through Bab el-Mandeb slumped to a multi-month low on Sunday, while traffic at the Strait of Hormuz remains subdued at a two-month low, vessel data show. The last time both chokepoints came under simultaneous pressure was during the height of the Gaza war in 2024, when Houthi attacks on more than 100 vessels prompted a punishing US and Israeli air campaign that ended the assaults by early 2025.
US gasoline prices have already climbed above $4 a gallon as the conflict drags on, and a sustained disruption at both straits would push crude prices higher and drive up insurance premiums for Gulf transit. The International Energy Agency has warned that a prolonged closure of either chokepoint could tip the global economy into a supply-driven recession.
This article is for informational purposes only and does not constitute investment advice.
