Iran: Hormuz Strait Closure Vow – New Leader’s First Stand

Former President Trump has repeatedly stated that the surge in oil prices following recent conflict will be short-lived, even claiming “We won, in the first hour it was over.” However, he has not outlined a plan to end the conflict or reopen a blockaded strait crucial for oil transport.

Trump Claims Victory Amidst Oil Market Concerns

Trump addressed supporters at a rally in Hebron, Kentucky, on Wednesday, stating, “You never like to say too early you won. We won.” He later added, “We don’t want to leave early, do we? We got to finish the job.” On Thursday, Trump acknowledged the United States benefits from higher oil prices, but reiterated his priority is preventing Iran from developing a nuclear weapon.

The U.S. is a net oil exporter, but remains the world’s largest oil consumer, utilizing roughly twice as much oil as the European Union. Economists warn that sustained high oil prices could lead to widespread inflation.

Increased Security Presence in Iran

Residents within Iran report an increased presence of security forces on the streets. “Security forces are everywhere, more than before. People are afraid to come out, but supermarkets are open,” said a teacher in Tehran.

U.S. intelligence sources indicate that Iran’s leadership remains largely intact and is not facing imminent collapse. Both Israel and the United States have called for Iranians to overthrow their current clerical rulers. While many Iranians desire change, and some celebrated the death of a senior leader whose forces previously suppressed protests, there has been no organized anti-government activity during the current conflict.

Tehran Seeks Economic Impact

Iranian officials have indicated their strategy is to inflict a prolonged economic shock to compel the U.S. to de-escalate. A spokesperson for Iran’s military command stated on Wednesday that the world should prepare for oil prices to reach US$200 a barrel.

Oil prices surged on Thursday despite the announcement the previous day of a coordinated release of 400 million barrels of oil from strategic reserves, with nearly half coming from the United States. This is the largest coordinated intervention in oil markets to date, but analysts at ING note that releasing the reserves will take months and only covers approximately three weeks of supply from the blockaded strait.

“The only way to see oil prices trade lower on a sustained basis is by getting oil flowing through the Strait of Hormuz,” ING analysts said. “Failing to do so means that the market highs are still ahead of us.”