The Middle East situation, which seemed to be heading towards a peace agreement, is once again plunging into turmoil. On June 20, Iran suddenly announced the re-blockade of the , putting not only the market but also the global economy on high alert. This is a truly roller-coaster situation, considering that oil prices had plummeted just a few days prior due to the entry into force of a memorandum of understanding (MOU) between the US and Iran. Let’s take a closer look at what impact this situation will have on international oil prices and the global economy.
Middle East Crisis Reignited: Re-blockade of Hormuz
On June 20 (local time), Iran declared the re-blockade of the Strait of Hormuz, citing violations of the ceasefire MOU by the United States and Israel. This came just two days after transit through the strait resumed following the US-Iran ceasefire MOU. The Khatam al-Anbiya Central Military Headquarters, which commands the integrated Iranian forces, stated that the re-blockade was due to “the United States’ clear violation of the principle of good faith and non-fulfillment of promises, including the non-implementation of Article 1 of the memorandum.” In particular, they raised concerns about the continued airstrikes targeting the pro-Iranian armed group Hezbollah in southern Lebanon. The US Central Command, responsible for the Middle East, immediately stated, “US forces are stationed in the region and remain vigilant to ensure that the agreement with Iran is observed and fully implemented,” emphasizing its commitment to supporting freedom of navigation.
International Oil Prices: The Beginning of a Roller Coaster Market?
The Strait of Hormuz is a critical energy transit route, accounting for approximately 35% of the world’s seaborne oil shipments and 20% of all oil trade. Its importance is overwhelming, especially given that about 82% of crude oil imported into South Korea passes through this strait. Iran’s re-blockade declaration immediately impacted the , increasing upward price pressure. Earlier, international oil prices had plummeted to the low $80s per barrel on news of a peace agreement between the US and Iran, but this re-blockade has once again heightened uncertainty. International oil prices are highly sensitive to geopolitical risks, and a sharp price increase will be unavoidable if concerns about supply disruptions materialize.
Dark Clouds Over the Global Economy and Shipping Industry
The threat of a Strait of Hormuz blockade is not limited to rising oil prices. It is also directly impacting the global . If transit through the strait is restricted or safety issues arise, it can lead to increased insurance premiums, transportation delays, and other negative effects on the entire global supply chain, in addition to the resumption of ship operations. Even after the peace agreement between the US and Iran, the shipping industry remained cautious about operating in the Strait of Hormuz, as there were many issues to resolve, such as mine clearance and verification of navigation safety. Experts predict that it will take a considerable amount of time for the commercial shipping system to fully normalize even after the strait reopens.
Iran’s declaration of a re-blockade of the Strait of Hormuz has once again amplified uncertainty surrounding international oil prices. Changes in the Middle East situation are always unpredictable variables, but the stability of the Strait of Hormuz is directly linked to the global energy market and the world economy. Diplomatic efforts by the relevant countries are urgently needed, and we must closely monitor future international affairs and oil price trends.