Key facts
- Iran has confirmed the closure of the Strait of Hormuz until further notice.
- The Strait of Hormuz is responsible for approximately one-fifth of the world's oil supply.
- The closure follows escalating strikes between Iran and the US.
- Brent crude oil prices increased by 4% to nearly $80 per barrel.
- The development has rekindled concerns about global inflation.
Markets are bracing for a potential drop as Iran has confirmed the closure of the Strait of Hormuz, a critical chokepoint for global oil supply. The narrow waterway, which connects the Persian Gulf with the Gulf of Oman and the Arabian Sea, was responsible for around a fifth of the world's oil supply prior to the conflict.
Iran's regime issued a statement declaring, "The Strait of Hormuz will be closed until further notice and until the end of the US interventions in this area and no vessel will be allowed to pass." This action follows escalating tensions and a series of US strikes against Iran, including the fourth strike in a week conducted on Sunday in retaliation for an Iranian attack on a Cyprus-flagged container ship.
In response to the news, Brent crude, the international benchmark for oil prices, surged four percent to just shy of $80 per barrel, reaching highs not seen since mid-June. While this surge has not yet reached the peak levels of $120 seen during earlier conflict phases, it has reignited fears of global inflation, which is still being impacted by the energy shock experienced earlier in the year.