WASHINGTON, DC – Commercial shipping through the Strait of Hormuz has effectively halted, a development coinciding with President Donald Trump’s assertion that the U.S. War with Iran is “very complete.” The disruption, impacting roughly 20% of the world’s oil supply, is creating a paradoxical situation where Iran, despite facing extensive U.S. Military action targeting over 3,000 sites in the first week of operations, is inflicting economic pressure on the United States and its allies.
While the Trump administration has publicly downplayed the economic consequences, the U.S. Benchmark for crude oil experienced a significant, though temporary, drop of 13.7%, or approximately $13 per barrel, following CBS News’ interview with the President. Oil prices, though rebounding somewhat, remain elevated above pre-war levels. Major stock indices likewise initially reacted negatively before closing in positive territory Monday.
The situation stems from Iran’s decision to effectively close the Strait of Hormuz to vessels affiliated with the U.S. And its allies, while continuing to ship its own oil to China. This strategy, described by some analysts as a form of “de facto sanctions,” is designed to limit the flow of oil to nations reliant on the waterway, thereby impacting their economies and, exerting pressure on the U.S.
The Pentagon and National Security Council, according to multiple sources, underestimated Iran’s willingness to seize this step in response to U.S. Military strikes. Planning for the operation did not fully account for the potential consequences of a complete closure of the Strait, with analysis from the Departments of Energy and Treasury receiving secondary consideration during the decision-making process. Treasury Secretary Scott Bessent and Energy Secretary Chris Wright were involved, but the administration prioritized input from a tight circle of close advisors.
President Trump has repeatedly stated his confidence in the U.S.’s military superiority, claiming Iran’s navy, air force, and missile capabilities have been severely degraded. He has also suggested the U.S. Could “do a lot” about the Strait, even contemplating a takeover of the waterway. Although, the Pentagon has indicated that high-risk naval escorts of oil tankers through the strait are currently deemed too dangerous to conduct.
The change in Iran’s supreme leadership, with Ayatollah Mojtaba Khamenei replacing his father, has not prompted any shift in the U.S. Position. President Trump stated he has “no message” for the recent supreme leader and indicated he has someone else in mind to lead the country, offering no further details.
The economic fallout from the disruption in the Strait of Hormuz is expected to intensify in the coming weeks, with the administration’s efforts to alleviate the situation still in their early stages. President Trump, however, continues to downplay the tumult in energy markets, suggesting oil tanker crews should “show some guts” and proceed through the strait.
