President Donald Trump is threatening to close off the Strait of Hormuz — a crucial waterway that he has repeatedly told Iran must be reopened unconditionally.
“Effective immediately, the United States Navy, the Finest in the World, will begin the process of BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz,” Trump posted on Truth Social Sunday morning. “At some point, we will reach an ‘ALL BEING ALLOWED TO GO IN, ALL BEING ALLOWED TO GO OUT’ basis, but Iran has not allowed that to happen.”
Iran’s decision to close the strait to oil tanker traffic has caused severe economic damage to some countries that rely on Middle Eastern crude, and it has led prices to surge around the world — including the United States.
So why would Trump want to blockade the strait that he wants reopened?
The strait isn’t technically closed — Iran has been gradually allowing some tankers through in exchange for a toll of up to $2 million per ship. And, crucially, Iran has been allowing its own oil to pass in and out of the region throughout the war: Iran had managed to export an average of 1.85 million barrels of crude a day through March — about 100,000 barrels a day more than in the previous three months, according to data and analytics firm Kpler.
By closing off the strait, Trump could cut off a key source of financing for Iran’s government and military operations.
It’s a lever the administration has been unwilling to pull: Blockade the strait — even to Iranian oil, and the price of oil could surge around the globe.
That’s why the US Navy has allowed Iranian tankers to pass through the region. Any oil flowing out of the region right now could help keep oil prices at least somewhat in check.
In fact, the United States in March granted a temporary license for Iran to sell oil that had been sitting afloat on tankers.
The United States has sanctioned Iranian oil on and off for decades, and the Trump administration has blocked sales of the country’s crude since it abandoned the Iran nuclear agreement in 2018. Trump’s decision to drop sanctions last month freed up a lot of crude: 140 million barrels worth, which is enough to satisfy the entire world’s oil demand for about one-and-a-half days, according to the US Energy Information Administration.
But the optics of the temporary, one-month waiver on sanctions were difficult: The license allowed Iran to sell its sanctioned oil to help finance its war against the United States and its allies. And Iran was profiting handsomely off its sales, selling its oil for a premium of several dollars above the price of Brent crude, the international benchmark.
Anger about surging gas prices pressured the Trump administration to wrap up its war, and releasing hundreds of millions of barrels perhaps bought it a bit of time. Because Iran was selling its oil anyway, dropping the sanctions opened up the oil sales to Western countries instead of going exclusively to China, Iran’s biggest customer by far.
The administration has tried to find any lever it can pull to keep oil prices in check while it wages its war. It coordinated a historic release of emergency oil reserves around the globe, and the Trump administration desanctioned hundreds of millions of barrels of Russian oil last month, as well.
Now, Trump is risking sending oil and gas prices even higher to maximize leverage over Iran to end the war.
